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Bankrupt Detroit Announces Deal To Save Art Museum

Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “What are the pros and cons of bankruptcy?”

The shadow hanging over Detroit’s Institute of Arts got a bit brighter this past week when a collection of foundations agreed to donate $330 million to bolster the city’s pension funds so that the art in the museum would not need to be sold off. The plan is an unusual one and is designed to prevent the city from hawking its valuable art collection to pay its debts.

 

Detroit Skyline Charlotte Bankruptcy Lawyer North Carolina Chapter 13 AttorneySources close to the negotiations say that U.S. Chief District Judge Gerald Rosen, who serves as the federal mediator in the Detroit bankruptcy case, first floated the idea several weeks ago and it appears to have paid off. Rosen has spent weeks discussing the idea of selling off the artwork in the museum to pay the city’s debts, but agreed that doing so would come at a huge cost to citizens of Detroit as well as others in Michigan.

 

To help solve the problem, a coalition of foundations was assembled that agreed it was important to keep the art in public hands. To do this, they decided to create a fund of private money to support the underfunded pensions of Detroit public servants, something that will still need to be approved by the city’s union leaders. Assuming the union leaders agree to the $330 million pledge, one of the major creditors of the city would be satisfied and the museum’s contents may not have to be auctioned off.

There has been controversy for months about the potential sale of the art museum and its works. A few months ago Christies auction house was hired to appraise the collection. Christies reviewed only about five percent of the total, saying that the value ranged from $500 million to $900 million. Experts believe that the total value of the museum’s 60,000-piece collection is worth several billion dollars, though much of that art was donated and may be encumbered by private agreements.

 

Many agree that the announcement should help take some pressure off Detroit by lessening the need for the city to raise emergency funds to pay off creditors’. The liquidity of a sudden $330 million infusion of cash should help immensely with giving the city flexibility as it works its way through the cumbersome bankruptcy process.

 

Others say that the recently announced deal might be part of a larger effort by Rosen to create a grand bargain to resolve claims against all of the city’s creditors in one fell swoop. The hope is that by moving quickly the city and its institutions can be spared a lengthy process, which should help get the city back on its feet faster.

 

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.

Source:

“$330M pledged to save pensions, DIA artwork from Detroit bankruptcy,” by John Gallagher, published at FreeP.com.

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