The Detroit Institute of Arts is firing back at creditors who say the city should use the museum’s assets to pay them off.
The DIA filed a formal objection to those creditors in bankruptcy court this week, just as city lawyers acknowledged an ongoing effort to put a price tag on the museum’s entire collection.
Detroit’s proposed plan of adjustment, which lays out its blueprint for restructuring in bankruptcy, would protect the DIA.
That’s the purpose of the much-discussed grand bargain: using more than $800 million public and private dollars to safeguard the museum’s assets, and minimize pension cuts for city retirees.
In a statement, the museum called the grand bargain “an unprecedented investment in the city and its people”—and warned that “those creditors should not be allowed to sabotage this historic opportunity.”
But those same creditors—largely bond insurers representing unsecured city bondholders, who would take steep losses under the plan--say the grand bargain unfairly favors pensioners.
And they argue the DIA’s collection is worth far more than the grand bargain suggests—even going so far as to put out solicitations for bids on portions of the collection to prove it.
Lawyers for those creditors have argued they should be able to bring in their own appraisers to put a value on the art.
City lawyers have fought that request, and Judge Steven Rhodes has rejected any plan that would remove art from the museum.
But that has put pressure on the city to assess the value of the DIA’s full collection.
In hearings this week, city lawyers told Judge Rhodes that experts are in the middle of doing just that.
Their assessment would include the museum’s massive collection of works sitting in storage, and also pieces not purchased directly with city funds.
Christie’s auction house only appraised those city-owned portions of the DIA collection, and had only limited access to works in storage, lawyers said.
That appraisal was used to put a rough price tag on the grand bargain.
In court filings, the DIA has warned it will fight all attempts to use any of the museum’s assets to pay off city creditors.
Its objection points out that many museum pieces were donated expressly to the DIA, and are tied up in legal trust agreements.
It goes on to say that if the city alters its plan and pursues any kind of sale, it will turn Detroit’s entire bankruptcy case into a lengthy, complicated court battle.
"[The grand bargain] is an opportunity for the City to emerge from bankruptcy while being fair to creditors and preserving a key cultural institution necessary to the long-term viability of the City and the welfare of its people," the museum said in a statement about its objection.
"To the creditors, the DIA is simply a cultural luxury that Detroiters do not deserve and cannot afford."