I’m juggling three stories of major interest, but can’t do justice to all of them at once:
—The raucous surprise protest demonstration Saturday evening inside the Guggenheim Museum, New York, lambasting alleged human rights violations involving Abu Dhabi construction workers, to which the Guggenheim issued a cryptic but somewhat encouraging response. Guggenheim director Richard Armstrong has previously expressed strong concern for workers’ rights. In today’s annoucement, the Guggenheim Foundation stated: “It is important to clarify that the Guggenheim Abu Dhabi is not yet under construction.” Might that signify that construction of the much delayed Frank Gehry-designed Guggenheim satellite won’t begin, absent an ironclad guarantee of humane treatment of migrant workers there?
—The much anticipated and very welcome inclusion of the Grand Bargain to protect in perpetuity the Detroit Institute of Arts’ (DIA’s) collection in the Plan of Adjustment filed on Friday in U.S. Bankruptcy Court by Kevyn Orr, the city’s emergency manager.
Let’s focus, for now, on this good news from Detroit. Here’s the relevant excerpt from Orr’s Summary of the Plan of Adjustment:
The city intends to:
Emphasize negotiated solutions—including through continuing federal mediation—that maximize creditor recoveries while allowing the City to meet its obligations and have a viable future.
The Plan contemplates:
—A consensual resolution of matters related to the DIA expected to yield approximately $465 million from certain philanthropic foundations and DIA Corp., which funds would be devoted to increasing the assets of the City’s two pension funds.
—A potential agreement involving the State that would provide as much as $350 million for pension claims in exchange for releases from pension claimants that elect to participate in the settlement.
According to p. 42 of the more detailed Plan for the Adjustment of Debts of the City of Detroit, the money to be contributed by foundations towards the Grand Bargain (now pegged at $365 million) and the additional $100 million that DIA has committed to raise to secure its independence from the city and its ownership of its collection are to be paid out over a 20-year period.
Reacting to Friday’s important step forward, the Detroit Institute issued an exultant statement that proclaimed, in part:
As a result [of Orr’s plan], the museum will remain and grow as an anchor of Detroit’s Midtown neighborhood and will continue to contribute greatly to a resurgent Detroit…
…or maybe not.
All of the financial pieces have to come together for the “Grand Bargain” to happen, and Detroit’s other stakeholders must agree to a settlement freeing the DIA and its collection from city control. As soon as Orr’s settlement plan was publicly released, the many stakeholders who felt shortchanged started screaming.
As quoted in the NY Times, Lee Saunders, president of the American Federation of State, County and Municipal Employees, called Orr’s plan “an abomination.” The Detroit Free Press quoted Steve Spencer, financial adviser to Financial Guaranty Insurance Company and Syncora (two of Detroit’s largest unsecured creditors) asserting that “it is vital that the full value of the [DIA’s] collection be explored in order to generate potentially billions of additional dollars [emphasis added] for the benefit of all creditors.”
And Michigan Gov. Rick Snyder was quoted in the Detroit Free Press as warning that getting the state legislature to allocate up to $350 million towards the plan “won’t be easy.”
One need only read the barrage of tweets over the last few days by the Free Press’ inexhaustible Nathan Bomey to realize how far away the bankruptcy stakeholders still are from reaching an agreement.
We can only hope that after the first swell of heated rhetoric and trash talk, all the sides come to their senses in time to realize that it’s in everyone’s best interests to negotiate, not litigate.
I’m not laying any odds on whether or not this will happen.