Economics Museums USA

Fate of Detroit’s art hangs in the balance as bankruptcy trial begins

Private foundations have pledged $816m to save the city’s art collection, but some creditors call the Grand Bargain unfair

American automakers Chrysler, General Motors and Ford pitched in to the Grand Bargain to "buy back" the Detroit Institute of Arts's collection from the city, a plan the emergency manager Kevin Orr (far right) supports. Photo: REUTERS/Rebecca Cook

On Tuesday, 2 September, a bankruptcy trial to determine the future of the city of Detroit is due to begin after more than a year of negotiations—and the fate of the Detroit Institute of Arts (DIA) hangs in the balance. The resolution of the largest municipal bankruptcy in US history is likely to set precedents for other struggling cities. At the centre of the conflict is the question of whether a bankrupt city can avoid selling any valuable asset, including its art collection.

At trial, several of the city’s largest creditors will seek to persuade Judge Steven Rhodes to reject the proposed plan, drafted by local officials, to eliminate more than $7bn of the city’s $18bn debt. Among the most controversial elements is a provision to protect the city-owned art collection from liquidation. The executive vice president of the Detroit Institute of Arts, Annmarie Erickson, is expected to testify.

To safeguard the museum’s collection and raise money for the city’s pensioners, the state of Michigan has teamed up with local and national organisations to pledge $816m over 20 years. The money would essentially fund a “buy-back” of the collection from the city of Detroit while providing pensions to retirees from the city’s police and fire departments. (Donors to the so-called Grand Bargain include the Los Angeles-based J.Paul Getty Trust, the Andrew W. Mellon Foundation and the DIA itself, which pledged $100m.)

The agreement is controversial because it would pay some of the city’s other creditors, including the large bond insurers Syncora and Financial Guaranty Insurance Co, significantly less than the pensioners. The insurers argue that this solution is unfair and discriminatory and therefore in violation of US bankruptcy law. They also claim that a sale of the art collection could garner much more than the grand bargain would contribute—as much as $8.1bn. Though it is likely that any decision will be appealed, city officials hope to complete the trial by the end of September.

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4 Sep 14
1:43 CET


Mr. White, I would be flabbergasted if Kevyn Orr suggested selling covenants. If you don't have a source, let's assume you are putting words in his mouth for your own gain. You lack in credibility.

2 Sep 14
14:42 CET


$8.1 billion -- likely an underestimate -- can do a lot more for pensioners and other creditors than the $816 million over 20 years that city contractor DIA Corporation is offering to buy Detroit's complete DIA art collection. Detroit Emergency Manager Kevyn Orr suggested selling artwork covenants instead of artworks, which could raise those billions in cash from DIA artworks that stay on DIA walls. Here's hoping that Detroit does raise those billions so retirees can have the healthcare coverage that Detroit promised and Detroit can afford. One retiree, Gisele Caver, testified that losing specialist healthcare is ruining her health and could put her in an early grave. For Giselle Caver and thousands of retirees like her, that -- not the removal from Detroit of its DIA artworks -- is the price of rejecting art finance innovations. The Grand Bargain is no bargain for Detroit and its retirees. It's just a low bid rigged by an uncaring feudal elite. Detroit can do better.

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