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Detroit bankruptcy judge nixes art access request

By Ed White

DETROIT (AP) - A judge in Detroit's bankruptcy refused to grant hands-on access to a valuable trove of art Thursday, telling creditors who face steep losses in the case that they can visit a city museum and browse the walls like any other patron.

Bond insurers have pointed to the art as a possible billion-dollar source of cash in the bankruptcy. But the city is firmly opposed to any sale and instead is banking on a separate, unique deal that would protect the art forever and soften pension cuts for thousands of retirees.

Attorneys for Syncora Guarantee and Financial Guaranty Insurance said potential buyers should be allowed to look at certain pieces at the Detroit Institute of Arts, even remove them from the walls and examine the backs.

"The record fails to justify this extraordinary relief," Judge Steven Rhodes said after hearing arguments for more than an hour.

He said creditors don't deserve special treatment and instead can go to the museum and look at the art "like everyone else."

After Detroit Bankruptcy, What U.S. City Is Next?

Art has been a hot issue in the bankruptcy because many creditors believe pieces could be sold to pay debts. City-owned art has been valued at $450 million to $870 million, but some Wall Street creditors say that's way too low.

A so-called grand bargain favored by Detroit, wrapping in illustrious art and city retiree pensions, involves $816 million from foundations, philanthropists, the museum and the state of Michigan. The state's part, a $194.8 million lump sum, remains unsettled in the Capitol.

The money would be exclusively earmarked for pensions.

"To us, the grand bargain is not grand. It's more grandiose than grand," said Marc Kieselstein, an attorney for New York-based Syncora, which could lose hundreds of millions of dollars in the bankruptcy.

He acknowledged the art is a "glittering link to the glory days of Detroit."

"But in bankruptcy, some of those rarified things, those edifying things, have to yield to things more base. Perhaps people would say more grubby" - such as creditor losses, Kieselstein said.

The creditors said they've found buyers willing to pay more than $1 billion for parts or all of the collection; one wants all Chinese art.

But under Detroit's bankruptcy exit plan, the museum would take control of thousands of pieces of city-owned art already there. The DIA, as it is known, has promised to raise $100 million of the $816 million pledged to ease cuts for retirees whose pensions are being reduced.

Rhodes, who will approve or reject the city's entire bankruptcy strategy later this year, has repeatedly signaled that one-time asset sales probably are not a good idea. He said the art would not have been available to creditors if Detroit had chosen to skip bills and fix its finances outside of bankruptcy.

In a statement, Financial Guaranty suggested the fight over art isn't over.

"We maintain that the drastically undervalued DIA settlement under the 'grand bargain' places politics over the financial and legal realities of the situation and will almost certainly result in drawn-out litigation that no one wants," the company said.

Join the discussion

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robinwoolum238 May 16 2014 at 1:21 PM

I'm sure Obama is going to give some more of my tax dollars to that broke ass City who has wasted money and now is looking for help? They need to liquefy all their assets & the government needs to stop getting involved. I'm tired of paying for auto, bank, & City problems. Who's going to bail me out if I have an issue?

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rstrickland May 16 2014 at 10:39 AM

It's time to limit government, government spending and government employee compensation. They are far over compensated for what they produce. Most of them should have been fired. It should be like in the real world - if you make an unrealistic contract you get NOTHING. NOTHING is what most of them deserve!

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paddleman1928 May 16 2014 at 10:35 AM

anyone who lends Detroit a cent deserves to loose it all. It is obvious detroit has no intention of paying anybody back in any meaningful way. Fools and their money are soon parted

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2 replies
BLONDIE & GRUMPY paddleman1928 May 16 2014 at 11:18 AM

Of the 600,000 people remaining in Detroit; how many are on Food Stamps and Government Subsistance... 80%, nice???

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boogiewiz paddleman1928 May 16 2014 at 11:19 AM

believe the government bailed them out once already

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browse62 May 16 2014 at 10:28 AM

It's not as if the art works are going to be destroyed if they are sold. They will just be preserved elsewhere. It's true that they may not be available for easy viewing by Detroiters if they are moved elsewhere in the country or our of the country but really, how many of these art objects are actually on display now as opposed to being in museum storage and how many people actually visit the Detroit museum each year that will be inconvenienced to view it elsewhere? If the city owns the art and they aren't paying their bills they need to sell it and make good on their obligations.

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1 reply
racook browse62 May 16 2014 at 11:32 AM

Thats BS sell the art get out of debt how many people in Detroit go to museums the land isn't worth Jack thats like going bankrupt with a billion dollars in your checking account somebody has to pay

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Mike May 16 2014 at 10:09 AM

Typical government. The pensions of the people, and the people's 401K investments in the companies that Detroit & judge are defaulting on are more important than an art museum. Sell the art and start over when you can afford it.

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Colonel Weierman May 16 2014 at 10:05 AM

Let me understand the Judges Assinine view: The creditors don't have a right, like in all other bankruptcy cases to simply take all the assets in question and DO AS THEY PLEASE? Why? Why is this case different? This judge should be fired! Once again Crime sure pays in Detroit.

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Frankie May 16 2014 at 10:02 AM

Detroit having an art museum is like,..........A crack addict,on food stamps, Living in a cardboard box, .......But,Driving a new Cadillac!

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1 reply
Patti Frankie May 16 2014 at 10:45 AM

Perhaps if you truly don't know what you're talking about you should keep some nasty comments to yourself. There are a lot of fine things and fine people left in Detroit. And the DIA is one of the best in the country. There's a whole lot more to Detroit than what you think you see in the news or read in the paper.

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fullsrvlaw May 16 2014 at 10:25 AM

That art belongs to the people of the City of Detroit. It should not be sold. There are plenty of other assets that can be sold to satisfy creditors. Detroit has been mismanaged for years. If they can get a truly great city manager to take over Detroit, it can once again become a great city.

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2 replies
mindbender48 fullsrvlaw May 16 2014 at 10:43 AM

Ask the people, afterall like you said THEY paid for it so the big shots could look good and strut their stuff.

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Clark Trucking fullsrvlaw May 16 2014 at 10:50 AM

Plenty of other assets? Really? Seriously What "other assets?" Where? Can we go see them?

Look at it this way. If any of the rest of us went BK and we had a lot of art hanging on the walls in our residence, don't you think the creditors would petition the court to turn that art over to the creditors? Why, yes. They would

The way to look at this is how we would want to be treated ourselves. We're not talking about an issue of public safety or health here like taking over the county hospital or a sewage treatment plant, or something like that. We're talking about a discretionary purchase of art that a bankrupt city like Detroit NEVER had any business making in the first place.

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1 reply
IBruzEZ Clark Trucking May 16 2014 at 11:04 AM

If you go Bankrupt you wouldn't expect them to go into your mother's house, or your son's house to take things and say "we can take this to use to pay YOUR debt". That is the deal here I think. Art bought long ago shouldn't just be shipped off. Libraries, museums... hey.!! the US is in debt.. sell off the constitution, liberty bell, bill of rights, all THAT good stuff.!! lots of collectors want that too.

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HM May 16 2014 at 9:40 AM

Well, it appears that crime is going pay once more in Detroit. It wasn't enough that a bunch of sorry-ass politicians loot the city treasury and leave nothing. Now the companies that loaned them money are going to get the shaft too. When crime pays like it has, and apparently still does, in Detroit, everyone is a victim. The judge needs to let the City go down and allow the citizens who elected these criminals pay the price - not the lenders.

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jdshill May 16 2014 at 9:37 AM

Most of the discussion below smacks of a primitive narrow vision, the sort of perspective you would get in some banana republic - Yes sell the art to the highest bidder here in the US, then find out it ends up in Saudi Arabia, China or Singapore, resold again to another high bidder, with the profits of these sales going into offshore banks, with no benefit to us, ie US. Find another solution that allows Detroit, Michigan and the US to hold onto our patrimony. Let not run-away capitalism undermine legitimate capitalism.

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