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Detroit Bankruptcy Judge Denies Creditors a New Appraisal of DIA

by Mostafa Heddaya on January 24, 2014

DIA-facade

The inscription on the façade of the Detroit Institute of Arts reads, “Dedicated by the people of Detroit to the knowledge and enjoyment of art.” (image via Flickr user glennia)

In July, when we covered Peter Schjeldahl’s since-retracted stance on selling the Detroit Institute of Arts (DIA), we noted the legal and logistical challenges of liquidating any part of the collection. Though a lot has transpired since then — most notably the Christie’s appraisal of the “city-owned” portion of the DIA’s collection — there remains a lingering uncertainty about the legal standing of City of Detroit creditors vis-à-vis the DIA itself. Yesterday, Judge Steven Rhodes of the Eastern District of Michigan denied the request of a consortium of creditors calling for a new, “independent” evaluation of DIA’s entire collection. The creditors believe such a review is necessary because the “Christie’s evaluation, which was ordered by the city … only covered 5% of the collection rather than the entire 66,000-piece collection and, they argued, that the art was worth far more than Christie’s high-end estimate of less than $900 million,” the Detroit Free Press reported.

“Whether any of us like it, the art is in play,” an attorney representing a number of European investment banks is quoted as having said during the proceedings. Though Rhodes stuck a partially conciliatory tone with the aggrieved bondholders in saying that he is “not totally unsympathetic” to their cause, he rejected that the art was “in play” in any substantial sense, saying: “It depends on what you mean by ‘in play.’” According to the Free Press, the judge added that “he’s not sure DIA artwork can be sold to help resolve the city’s Chapter 9 bankruptcy” and “reiterated his previous statements that one-time fixes won’t repair the city’s finances. And he called Michigan Attorney General Bill Schuette’s opinion that the DIA property can’t be sold a ‘serious argument’ that he would consider.”

This latest round of pressure on the DIA comes on the heels of Detroit Emergency Manager Kevyn Orr’s attempt last week at indirectly pressuring the museum into contributing $100 million over 20 years to the bankruptcy resolution. As ever in these ongoing legal wranglings, the developments are troubling but leave more questions open than closed. And none of these matters are likely to be resolved any time soon: “In case you hadn’t noticed, I don’t do faits accomplis,” Rhodes said.

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