Detroit Emergency Manager Kevyn Orr’s plan to monetize the collection of the Detroit Institute of Arts, whether by sale or otherwise, took a large step towards realization today when at least nine local and national foundations pledged up to $330 million to Detroit to keep the collection of the Detroit Institute of Arts safe from sale, loan, or other encumbrance, and also to shore up pension funds Following the release of Christie’s appraisal report, and weeks of rumors that a “grand bargain” was in the works to raise money in exchange for keeping DIA’s art collection out of any plan of adjustment for the city’s bankruptcy, the Detroit Free Press reports today that federal mediator and U.S. District Court Judge Gerald Rosen released a statement outlining the pledge. The foundations identified are the Community Foundation for Southeast Michigan, the Kresge Foundation, the Ford Foundation, the John S. and James L. Knight Foundation, the William Davidson Foundation, the Fred A. and Barbara M. Erb Family Foundation, the Hudson-Webber Foundation, the McGregor Fund and the Charles Stewart Mott Foundation.
This does not yet settle the question, but it does support our view that Orr’s coy handling of the DIA question may have been intended to result in just such a pledge all along, rather than an actual plan to sell anything with all the controversy it would bring. As discussed here previously, creditors could never have compelled the sale or other use of the artwork, but they could and can still object to any plan of adjustment that includes monetization of the artwork, either as inefficient or as a failure to maximize whatever use the city is willing to make. This deal seems designed to guard against such objections. Short of an outright sale, this is a huge amount of money to inject into the bankruptcy.
We are still just over a week away from the hearing on certain creditors’ motion to involve themselves in the DIA collection appraisal process itself. This proposal does not moot their motion, but it certainly takes the wind out of its sales, because the pledge does not seem related in a proportional way to the appraisal value of the collection; rather, it is a gift to ensure the survival of a civic institution. The donors could choose not to give that money without a promise that the art will be safe, so an objection to this component of any plan of adjustment would really just ensure that the total bankruptcy estate is smaller. That is rarely the goal of a financial creditor.
