Detroit Institute of Arts hall (image via Wikimedia)
A recent appraisal commissioned by Art Capital Group claims that the Detroit Institute of Arts (DIA) collection is worth significantly more than previously found by both Christie’s and Artvest Partners, the two firms that had previously evaluated the collection in connection with the city of Detroit’s bankruptcy proceedings. The Art Capital valuation of $8.5 billion is nearly twice the estimate presented by Artvest ($4.6 billion), and ten times the high estimate from Christie’s ($454–867 million).
As the city heads to court next week to defend its proposed bankruptcy plan, the new assessment threatens to unwind the current “grand bargain” agreement, the New York Times reports. That deal, approved by pensioners in a July vote, would spare the museum’s collection from financial involvement in the bankruptcy resolution thanks to funds raised from private and state coffers.
Ian Peck, chief executive officer of Art Capital Group, explained to the Times why financial creditors should have the right to demand that the city use the valuable collection as loan collateral:
The museum is owned by the city, and the city is, in fact, in bankruptcy. That asset lawfully should be available to assist in the plan of exit … But we also believe that this art is a national treasure and should be preserved as such.
This development, beyond occasioning the greatest lede thus far in coverage of the DIA’s bankruptcy saga — “On Wall Street, there is the art of the deal. In Detroit, there is the deal of the art,” from the Times’s Mary Williams Walsh — could see $500 million to $3 billion in debt issued for the payment of creditors. These loans, proposed by Art Capital Group (which famously sought to collect Annie Leibovitz’s negatives when she defaulted on a similar loan with the firm), would be serviced by municipal revenues not related to the museum — but if those falter, the art could be sold.
The Detroit Institute of Arts has not commented on the new appraisal or the proposal from Art Capital Group, though it has, according to the Times, sought to bar the appraiser from appearing as an expert witness in the case.
This “deal” is dead in the water and the city is not even considering it. It’s just a ploy by Art Capital and Syncora to make a bunch of money. They don’t care about the artworks or the pensioners. Detroit is trying to use Chapter 9 to get ride of $7 billion in debt, why would they throw that away to take on $4 billion in new loans? If the city even tries to use the artworks as leverage the grand bargain goes away and pensioners will be worse off under the Art Capital plan. Why cite the NYT? They keep leaving out important facts in their coverage. Read the Detroit papers.