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Abstract

The city of Detroit is beginning to rise from the ashes following decades of fiscal ineptitude, social failure, and corruption. Bolstered by protections under Chapter 9 of the Bankruptcy Code, Detroit has eliminated billions of dollars in debt and established a feasible plan for municipal reorganization. Now, Detroit is even considered an American “comeback story.” However, Detroit’s revitalization began on a tenuous foundation. The city’s creditors objected vigorously to the bankruptcy petition by claiming that Detroit had not filed its bankruptcy petition in good faith under § 921(c). Despite the relatively scarce and imprecise case law and jurisprudence surrounding § 921(c), Judge Stephen Rhodes ruled that Detroit met the good faith requirement in addition to all of the requirements for Chapter 9 eligibility. In doing so, however, Judge Rhodes forged a new path in Chapter 9 analysis and established a practicable and principled “good faith” test. Now, Judge Rhodes’s approach to § 921(c) good faith can serve as a beacon of reason in an imprecise area of bankruptcy law.

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