Detroit took the dubious distinction of being the largest municipality to enter into bankruptcy under Chapter 9 on Tuesday morning after U.S. Judge Steven Rhodes ruled that the city was eligible to do so.

Judge Rhodes said that he ruled in the manner that he did because Detroit is broke and negotiations with its thousands of creditors were unfeasible. Rhodes said in an hour-long statement in court that the city is insolvent and eligible for bankruptcy and cannot pay its debts. Although he chided the city for rushing through negotiation, and said the city did not negotiate in good faith, the judge called the ruling a opportunity for a fresh start. Rhodes also said that the city had so many debtors that negotiations were now not practical.

Judge Rhodes also stated that public pensions could be cut in municipal bankruptcies. Almost half of the city’s debt stems from retiree benefits. Retiree healthcare is estimated at over five and a half billion dollars and pensions take up another three and a half billion. Opponents had earlier argued that the state of Michigan’s constitution protected pensions from being cut.

Ruling that all motions to appeal the case must be filed in bankruptcy court, Judge Rhodes declined to stay the bankruptcy proceedings as appeals proceed through the court system. He also halted any effort to take appeals directly to the 6th Circuit U.S. Court of Appeals.

The once proud city that was the center of the U.S. auto industry has declined into a state of urban decay and mismanagment through the years and now faces debts that exceed $18 billion. The city once had a population that boomed just short of 2 million people in 1950, but in recent years the population dropped to approximately 700,000. Almost half of the city’s street lights are non-functional and over 78,000 buildings in the city are abandoned. Detroit is struggling to provide even the most basic services for its dwindling population.

Major creditors asked Rhodes to order an independent valuation of Detroit’s Institute of Arts collection of over 66,000 pieces of art. That institute houses works by Matisse and Van Gogh as well as an original cast of the Rodin’s “The Thinker.” Creditors believe by selling off the works, much of the money owed them can be generated. Christies has yet to come up with a valuation of the accumulated works as yet.

With the judge’s ruling, Detroit will now begin procedures to restructure its debt and asset sales, which undoubtedly will include the artwork from the Institute. Also, Detroit is currently in the works to spin off its water and sewer department to the outlying areas for an estimated $9 billion over 40 years. Although the reaction coming from the suburban counties has been cool at that proposal.

To be sure, as the bankruptcy continues, citizens of Detroit will find it increasingly difficult to live in the once thriving city as Police Fire and Santitation services go under the ax and city employees will be let go even as taxes rise to meet the declining tax revenue.