A group of creditors in the $18 billion Detroit bankruptcy case have lined up billion-dollar bids from four investors for the collection of the Detroit Institute of Arts, the Detroit Free Press reports.
In an effort to undercut a "grand bargain" proposed by Detroit emergency manager Kevyn Orr in which ownership of the museum's collection would be transferred to a nonprofit organization in exchange for a contribution of $816 million from foundations, the state, and DIA itself to shore up city-funded public pensions, the Financial Guaranty Insurance Co. has asked U.S. Bankruptcy Judge Steven Rhodes to compel the city to consider the offers from the potential investors. FGIC has the support of the American Federation of State, City and Municipal Employees Council 25, bond insurer Syncora, and several other creditors.
"It is in the best interest of all creditors to maximize the value of the art — and there is widespread conviction among multiple creditor groups that the 'grand bargain' fails to do so," said Steve Spencer, a financial adviser with Houlihan Lokey, which is representing FGIC.
The prospective investors are Catalyst Acquisitions and Bell Capital Partners, which together have bid $1.75 billion for the entire DIA collection as well as its property; the Art Capital Group, which is offering a $2 billion loan to the institute with an interest rate of at least 6 percent, using the DIA collection as collateral; Yuan Capital, which put in a bid of up to $1.473 billion for 116 individual works from the collection; and the Poly International Auction, a Beijing-based auction house, which has offered up to $1 billion for DIA's Chinese art collection.
While Rhodes has said he would not approve one-time infusions of cash, calling them an unsustainable solution to Detroit's financial crisis, he has not ruled out allowing the city to raise money by selling parts or all of the DIA collection. Complicating any prospective sale of the collection is the fact that many works were donated to the institute on the condition that they never be sold. It is unclear whether such donor restrictions would hold up in bankruptcy court.
Orr told the Free Press that insurers "cannot compel the city" to sell art, saying that "the doctrine of Chapter 9 speaks for itself." Orr also urged retired city employees to accept the “grand bargain” and the funding it would provide. "If the grand bargain goes away we'll have to step back and reassess where we are and what opportunities are available to us," said Orr. "But that would be a shame for everyone because $816 million is a tremendous benefit for pensioners and the city.