Detroit suspends debt payments

DETROIT — On the brink of bankruptcy with $17 billion in liabilities, Detroit will suspend payments on $2 billion of unsecured debt, beginning with an instalment due Friday, Emergency Manager Kevyn Orr said.

With the missed $39.7-million payment on debt issued to fund pensions, Detroit becomes the most populous U.S. city to default since Cleveland in 1978. Unsecured creditors may receive as much as 10 cents on the dollar under a deal Orr offered to more than 100 creditors and union representatives Friday.

The city would create a regional water agency to take the place of its municipally owned department, and active and retired workers would see their pensions reduced under the plan.