As the controversy around the possible sale of the Detroit Institute of Arts’ collection continues to swirl, Emergency Manager Kevyn Orr has given some of his most pointed comments to date about his expectations.
To recap, the DIA collection is owned by the city of Detroit, now in bankruptcy. The question has thus arisen about to what extent, if at all, that collection is available to satisfy Detroit’s many creditors and what legal standards will determine the answers. Detroit’s underfunded pensions have been a particular flashpoint. As discussed here earlier, a municipal bankruptcy is different than an individual or corporate bankruptcy, creditors do not have as much power to force the sale of assets to maximize the bankruptcy estate.
The question will thus likely come down to (1) who has the power to decide what to do with the DIA collection; (2) what should that person do; and (3) what limits are there on that person’s discretion. Orr is the fulcrum of all this, but he has been careful not to commit himself to any particular approach. Bill Schuette, the Michigan Attorney General, has opined that the collection cannot be sold because it is an asset held in trust for the pubic, and there is legislation pending that could curb Orr’s power to sell the art, but for the time being the decision still rests largely in his hands. The hiring of Christie’s to value the collection makes it clear that Orr is serious about the potential use of the collection to help Detroit emerge from bankruptcy.
Last week, however, Orr hinted at a broader solution without giving much in the way of specifics. He made clear that he expects DIA, and its collection, to be part of the solution, but also that he does not plan to tell DIA—yet—what to do. Instead, he said:
"I’m deferring to them to save themselves, but if they don’t, I’ll take them up. . . I don’t have a plan. There’s no plan to take the bricks out from the Diego Rivera."
Speculation has thus followed that leases of the art, or other leveraging, may be what he expects. DIA, for its part (it is organizationally distinct, but the city owns its art) has been consistent and categorical that it considers the selling of its collection to be absolutely unacceptable. What remains to be seen is whether DIA proposes an alternative before Orr forces its hand. That showdown would likely do either side little good.
Also to watch for coming up, a hearing will be held on October 23 on the underlying question of whether the city of Detroit is even eligible for bankruptcy. The argument at sake is whether in seeking bankruptcy protection from certain kinds of debts (pension payments), the filing violations the Michigan Constitution. The validity of those debts would be a question of state law, and thus an available argument notwithstanding the Supremacy Clause. Whether Judge Rhodes agrees is another question.
