Not sure the state should really go there:
Indiana is one of the few states where an emergency manager can be put in charge of city finances. But unlike Detroit, bankruptcy isn't an option.
A law passed last year says a governing unit that can't pay its bills any more can ask the state to appoint an emergency manager, with power to cut spending, conduct audits, and review labor contracts.
Valparaiso Senator Ed Charbonneau first introduced the bill in 2011 as a means of helping cities avert bankruptcy. At the time, Gary was struggling to gain control of its debt.
But Charbonneau says the debate over bankruptcy overwhelmed discussion of the emergency-manager provisions. When he successfully revived the proposal in 2012, the resulting law excluded authorization for bankruptcy filings.
Charbonneau says he'd still like bankruptcy to at least be available. He says he might offer the idea again next year, now that it's no longer an immediate prospect for an city in particular.
Not sure just why, but having the emergency-manager appointment as the option of last resort seems like a better idea to me than allowing bankruptcy. I know they would both involve some painful things that have to be done, but bankruptcy seems like a more abject admission of total failure.