A federal judge on Friday approved Detroit's plan to emerge from bankruptcy, allowing the city to enter a new phase of financial recovery after years of economic struggles.
Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan endorsed the Motor City's plan to erase $7 billion of debt, just 16 months after Detroit became the largest city in the U.S. to file for bankruptcy.
"The court confirms the plan," Rhodes said within seconds of entering the court, the Associated Press reported.
Under the terms of the plan, negotiated largely in private sessions between the city and its creditors, Detroit will cut the pensions of general retirees by 4.5 percent and invest some $1.7 billion in social services.
The plan will also require the city to work under strict financial oversight in the coming years.
"Getting this resolved is a huge issue in terms of creating a great environment for the city, and not just the city but for the state, to all rally on focusing on growing Detroit," Michigan Governor Rick Snyder told the New York Times. "It really takes care of the city government issue and gets a normal context to be a more traditional government structure again."
The final deal did not ultimately include a proposal to sell off the Detroit Institute of Arts' collection, which had been valued by Christie's at some $867 million. However, the Institute, along with the state and private philanthropists, will contribute to a $816 million fund designed to help the city's pension funds.
Detroit has hemorrhaged residents in recent years, with the city's population at 688,000, down 30 percent from 2000, according to the AP.
Michigan's Lieutenant Governor Brian Calley welcomed the news on Twitter.
Hey world... #ICYMI: Detroit. Is. Back!
As did the state's Governor, Rick Snyder.
"This is a day we should celebrate and enjoy." Gov Snyder on Detroit bankruptcy resolution Watch: http://t.co/1E0lAEoJxJ
"It's a new beginning for Detroit, our region and our state." Judge Rosen on Detroit bankruptcy exit http://t.co/1E0lAEoJxJ
"We have a bright future ahead of us. Let's go get it done." Gov Snyder on Detroit bankruptcy resolution http://t.co/1E0lAEoJxJ