The Detroit Institute of Arts has pledged to raise $100 million over 20 years to contribute to the city’s bankruptcy fund. It’s the latest as Detroit’s bankruptcy saga rolls on, and the Detroit Free Press continues to have the scoop on the story.
The money will go to a “grand bargain” fund being coordinated by federal judge Gerald Rosen. Thus far, a group of foundations have pledged $370 million to the fund ($330 million initially, with $40 million offered by the Kellogg Foundation yesterday), and Governor Rick Snyder is considering contributing another $350 million from state coffers. Combined with the DIA’s $100 million, the money would be used to shore up severely underfunded city pensions, protect the DIA’s collection from sale, and free the museum from city control, making it an independent nonprofit.
Detroit Emergency Manager Kevyn Orr has previously said that he expects the museum to contribute to the city’s bankruptcy plan, at one point even throwing out a suggested figure of $400–500 million, but $100 million over 20 years has been the scheme most frequently batted about. DIA officials had formerly said it would be impossible because they don’t have that kind of cash on hand; their acquiescence now suggests it will be raised in debt.
Orr has been pushing the issue of a sale of DIA’s collection since last May, to many bystanders’ alarm, but it seems probable that it was all an elaborate pressure tactic — of dubious legal standing — to get the museum to contribute to the bankruptcy relief in a more direct way. As we’ve previously noted, most recently in a piece by Colin Darke last month:
Of course, the face of the City of Detroit is Kevyn Orr, and he has also, through his representative, fanned the flames of citizen fear that valuable paintings will be sold. This posturing, however, is in line with the actual nature of bankruptcy procedures. Namely, debtors seek leverage to negotiate deals. Unlike the creditors that seek to force the issue and cause a fire sale, a debtor can use the threat to reach a resolution where the debtor is able to create an income stream. The debtor can do this even while knowing that the economic realities (which include litigation risk) will never justify the threat.
The Free Press notes that the bankruptcy deal is still not final, but calls the DIA’s $100 million commitment raise a “linchpin” that “could mark a turning point in Detroit’s historic Chapter 9 municipal bankruptcy.”