Dec. 3 - After a nine-day trial, a U.S. judge ruled the city of Detroit, Michigan, is eligible for bankruptcy protection. Sarah Irwin reports.
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Once a booming city thanks to the U.S. auto industry - the city of Detroit now is officially broke. After a nine-day trial - U.S. Judge Steven Rhodes ruled negotiations with the city's thousands of creditors were unfeasible and therefore - Detroit is eligible for bankruptcy. It marks the largest municipal bankruptcy in U.S. history - and means the city also can cut pensions. Detroit's labor unions, retirees and pension funds had argued against the move, while Detroit's state appointed emergency manager Kevyn Orr had argued bankruptcy was the best bet for recovery. SOUNDBITE: DETROIT EMERGENCY MANAGER KEVYN ORR, SAYING: "We are gratified with the court ruling today to pursue a plan of adjustment under Chapter 9 of the federal banking code. While we are very pleased, we remain very concerned about the need to adjust the city's debt to improve its level of services for the citizens, and also to prepare for the city to exit the receivership in a fashion that restores democracy to the city." After Tuesday's ruling, the city needs to come up with a plan to reconcile more than $18 billion in debt. Creditors will have to accept a portion of what they city owes them - while an appeals process is expected to start in federal court.