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Detroit Exploits: Today’s Grand Bargain Announcement (plus Detroit Institute’s more aggressive legal stance)

Detroit Institute of Arts director Graham Beal (and me) Photo by

Detroit Institute of Arts director Graham Beal
Photo by Manal Abu-Shaheen

The Detroit Institute of Arts (DIA) was not providing any advance details regarding its “major Grand Bargain announcement,” planned for later this morning. After getting a heads-up from the museum on Friday about the planned announcement, I assumed it might have something to do with fundraising successes.

At least some (if not all) of the news was leaked early to Detroit reporters by other sources: Matt Helms of the Detroit Free Press reported that “leaders of the Detroit Institute of Arts will join Gov. Rick Snyder…to announce a $26-million contribution from the Detroit three automakers… to help the DIA raise its $100-million share of the grand bargain fund….One of [Helms’] sources said that even with the auto money, the DIA is still short of its $100-million goal.” (The Detroit News also had the story.)

In total, with contributions from private sources and the state, the Grand Bargain would “provide more than $800 million to mitigate reductions to Detroit pensioners, safeguard the DIA art collection and speed the bankruptcy proceedings by avoiding lengthy and costly litigation,” as described in the museum’s earlier press release.

But bond insurers, who stand to lose big bucks in the bankruptcy workout, are unimpressed by the Grand Bargain. They continue to press for sales of art from the museum’s rich collection to provide them with greater relief. What’s more, these creditors have successfully pushed for a more thorough evaluation of the DIA’s art, beyond the 2,773 city-purchased objects that were appraised by Christie’s.

On the plus side for progress towards the Grand Bargain were last Tuesday’s approval by the state legislature of a $194.8-million appropriation (the discounted present value of $350 million over 20 years) as the state’s contribution towards the Grand Bargain, and last Thursday’s unanimous approval by Detroit’s City Council for putting the DIA’s art collection and its other assets into a charitable trust, to shield them from being sold in connection with the city’s bankruptcy.

Michigan’s attorney general had previously issued an opinion that the DIA’s art collection “is held by the City of Detroit in charitable trust [emphasis added] for the people of Michigan, and no piece in the collection may thus be sold, conveyed, or transferred to satisfy City debts or obligations.”

Reacting to the insurers’ continuing demands, the Detroit Institute of Arts on May 27 piled its own legal verbiage onto the reams of court filings in “Case No. 13-53846″—Detroit’s bankruptcy proceedings. The museum issued a direct threat of “protracted, expensive litigation” if the city’s hungry creditors persisted in nipping at its heels.

That’s my rhetoric. Here’s theirs, from the court filing:

Any Attempted Sale of the Museum Art Collection by the City Would Result in Protracted, Expensive Litigation

Until recently, there has been little reason for the DIA Corp. or the City to define their ownership interest in the Museum Art Collection or to address transferability restrictions. If the City attempts to transfer its interest in the Museum Art Collection to satisfy creditors, the DIA Corp. (and likely the Attorney General [my link]) would institute proceedings to prevent the City from doing so.

Based on the fact-intensive nature of the dispute and the need to address more than a century of information regarding the Museum, the litigation would likely take years to resolve.

Donors and heirs also would challenge any purchaser’s right to continue to retain transferred objects. The City would have to spend substantial time and resources in litigation whose likely outcome is uncertain at best. [Emphasis added.]

At the time of the museum’s Monday morning announcement—11 a.m. Detroit time—I will be otherwise engaged and unable to post. Check the museum’s news-release website or the websites of the Detroit Free Press or Detroit News for instant gratification.

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