A ruling in a US state court has raised questions about whether Detroit's bankruptcy will stand up under legal review.
The state court judge in Michigan's capital of Lansing ordered Detroit's Emergency Manager Kevyn Orr to withdraw the bankruptcy petition because the state law that allowed Michigan Governor Rick Snyder to approve the bankruptcy violated the Michigan Constitution.
Orr, who was appointed by Snyder in March to try to resolve the city's financial crisis and tackle its $18.5 billion in long-term debt, acknowledged that court battles over the need for a bankruptcy filing could be protracted and difficult.
Governor Rick Snyder has said declaring the US city as bankrupt is an "opportunity to stop 60 years of decline in Detroit".
He told a press conference: "That's why we wanted this, to reassure the citizens of Detroit that normal operations will continue. People will be paid, people can do services.
"I don't view this as a terrible answer. Now is our opportunity to stop 60 years of decline. This is fundamental."
Detroit's state-appointed emergency manager has told a press conference that the move to bankruptcy was "tool" to give the city "breathing room".
– Detroit's state appointed bankruptcy manager Kevyn Orr
Bankruptcy is a tool in our toolbox to get at the goals that we want to achieve.
It gives us breathing room. We are being sued on almost a weekly basis and that's the very thing that I have pleaded for - not to happen.
Detroit was once synonymous with US manufacturing prowess - now it has become synonymous with decline, decay and crime:
- The city's debt is estimated to be $18.5 billion
- Detroit's population fell to 700,000 from a peak of 1.8 million in 1950
- It has nearly 78,000 abandoned buildings
- The city's murder rate is at its highest in 40 years
- Only one third of its ambulances were in service in the first quarter of 2013
General Motors (GM), the only major US vehicle manufacturer headquartered in Detroit, said the city's bankruptcy declaration was "a day that we and others hoped would not come".
GM, which filed and emerged from a Chapter 11 bankruptcy, said in a statement that it does not anticipate any impact to its daily operations.
The firm added, "We believe, however, that today also can mark a clean start for the city".
The Mayor of Detroit said the decision to file for bankruptcy protection was "very difficult", adding, "If it's going to make the citizens better off then this is a new start for us".
Mayor Dave Bing told a news conference: "This is a very, very difficult day for me, as I'm sure it is for a lot of our citizens here in the city of Detroit.
"When I took office over four years ago, I said Detroit was in a financial crisis and we tried to work our way through this situation over the last four years but it has been very, very difficult.
"As tough as this is, I really didn't want to go in this direction, but now that we are here, we have to make the best of it".
Michigan Senator Carl Levin said the news that Detroit has filed for bankruptcy protection "saddens me, however necessary it may have been".
Senator Levin continued: “Detroit is more than a part of the state I represent in Washington. It is my lifelong home.
"What stands out about Detroit through the centuries is its grit and resilience.
"I know firsthand, because I live in Detroit, that our city is on the rebound in some key ways, and I know deep in my heart that the people of Detroit will face this latest challenge with the same determination that we have always shown.”
The White House says President Barack Obama is "closely monitoring" the situation in Detroit.
A White House statement tonight said:
"While leaders on the ground and the city's creditors understand that they must find a solution to Detroit's serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and maintain its status as one of America's great cities."