Sunday, May 18, 2014

Detroit Update Spring 2014

The Detroit News is doing a terrific job of keeping us all updated on the Bankruptcy of Detroit and the date of the Detroit Institute of Art. I have also published below some experts of other media that are covering the story

The Detroit News


  • 10:59 PM, May. 14, 2014

  • 11:33 PM, May. 13, 2014

  • Wayne County
  • By Daniel Howes and David Shepardson The Detroit News
    GM, Ford, Chrysler preparing to give DIA large donations to aid bankruptcy exit
    Plans by Detroit's automakers to donate roughly $25 million to the Detroit Institute of Arts are part of the museum's $100 million contribution to a 'grand bargain' intended to help the city exit bankruptcy, protect city-owned art and bolster public pensions.

  • 11:22 PM, May. 13, 2014

  • Wayne County

  • 10:22 AM, May. 13, 2014

  • Wayne County

  • By Chad Livengood The Detroit News
    DIA tells bankruptcy judge: Inspecting art puts it at risk
    The Detroit Institute of Arts says a request by city creditors to let interested art buyers pull paintings off the museum's wall for a rushed 'yard-sale-like' bankruptcy appraisal just 'invites disaster.'

  • 11:38 PM, May. 12, 2014

  • Wayne County

  • 10:38 PM, May. 8, 2014

  • 1:22 PM, May. 8, 2014

  • 6:51 PM, May. 5, 2014

  • 7:15 PM, May. 2, 2014

  • 10:36 PM, Apr. 30, 2014

  • By Chad Livengood Detroit News Lansing Bureau
    Plan floats Detroit oversight panel after bankruptcy
    Lansing Gov. Rick Snyder said today he thinks lawmakers can avoid amending Michigan's controversial emergency manager law as part of a legislative package to make a $350 million contribution to a Detroit bankruptcy settlement.

  • 2:03 PM, Apr. 30, 2014

  • 10:31 PM, Apr. 29, 2014

  • Wayne County
  • By Chad Livengood Detroit News Lansing Bureau
    Bills for state aid for Detroit pensions to be introduced next week
    A 10-bill package to provide Detroit's pensions a $350 million infusion of state cash could be introduced next week, as Emergency Manager Kevyn Orr works to convince lawmakers to contribute to a settlement of the city's bankruptcy.

  • 11:38 PM, Apr. 28, 2014

  • 3:41 PM, Apr. 24, 2014

  • 1:18 PM, Apr. 22, 2014

  • 11:46 PM, Apr. 18, 2014

 From The Detroit News: 

Judge denies creditors' request to pull DIA art off walls
•Robert Snell
•The Detroit News
Bond insurers who have pushed Detroit to sell the art collection and spend the money paying creditors failed to prove they needed to remove art from the walls or storage, the judge said. (Daniel Mears / The Detroit News)
Detroit — The city’s bankruptcy judge refused Thursday to let creditors pull art off the wall at the Detroit Institute of Arts for appraisal and inspection purposes. Buy a ticket and take a tour instead, U.S. Bankruptcy Judge Steven Rhodes told bond insurers. Bond insurers who have pushed Detroit to sell the art collection and spend the money paying creditors failed to prove they needed to remove art from the walls or storage ,  the judge said.
“The risk to the art that could come from granting this relief…is a substantial risk and one not to be undertaken lightly…,” the judge said.
The ruling followed a nearly three-hour hearing in federal court. A group of creditors, led by Financial Guaranty Insurance Company and Syncora Guarantee Inc., had asked Rhodes to give     interested buyers a chance to make their own assessment of the vast art collection’s worth. The city has refused to sell the art, arguing the world-famous collection would play a key role in the city’s rebirth. FGIC and other creditors are trying to prove the DIA’s collection is worth more than an $816 million, 20-year pledge being offered by 12 philanthropic foundations, the state of Michigan and the DIA in the so-called “grand bargain” to swap the art for aid to 32,000 city pensioners. The DIA filed an objection in bankruptcy court late Monday night, telling Rhodes that a physical inspection of 3,000 works of art by outside parties puts the collection at “significant risk ” and creates an “unwarranted additional burden” for the museum.
DIA lawyer Arthur O’Reilly said the request to pull art off the walls and valuate the pieces is risky. “It absolutely creates the potential for harm,” he told the judge.
Some pieces are so large, a team of workers would need to use hydraulic lifts and climb scaffolds. “All of that movement creates a potential for risk,” O’Reilly said. “The very best way to keep art safe is not to touch it. Leave it in place.” Rhodes later told FGIC bankruptcy attorney Alfredo Perez his client could simply review the art collection by buying a ticket to the DIA.
Perez said his firm would need to arrange for access to art held in storage. FGIC, which faces losses of up to $1.1 billion in Detroit’s bankruptcy, made a global solicitation of bids earlier seeking investors interested in buying city-owned art or loaning the city money against the massive collection. The preliminary bids, disclosed in an April 9 bankruptcy filing and dubbed “indications of interest,” ranged from at least $895 million to buy 116 unnamed artworks to a $2 billion loan that would require the entire 66,000-piece collection to be held as collateral. The $816 million plan to rescue the city’s art collection and soften pension cuts is not such a grand bargain, a bond insurer said in court Thursday. “It’s more grandiose than grand,” Syncora Guarantee Inc. lawyer Marc Kieselstein told the judge. Syncora has pushed for the art collection to be sold to satisfy creditors, who fare a worse payout than retirees, the DIA and pension funds, all of which would benefit under the $816 million “grand bargain.” “We have our nose pressed up against the glass,” Kieselstein said. “Are you aware of a single case that holds municipalities in a Chapter 9 (bankruptcy) that has an unconditional right, an unconditional obligation, to minimize creditor losses?” the judge countered. “We think…that’s exactly what a city has to do,” the lawyer said.
“Why should creditors fare better in bankruptcy (compared to outside of bankruptcy court)?” the judge asked. “The ability to get a judgment,” the lawyer said. “A judgment’s a piece of paper,” Rhodes said. “What’s that get you?”
By David Skeel, Published: May 9 Washington Post
David Skeel is a professor of bankruptcy law at the University of Pennsylvania Law School.
The $816 million art-for-pensions deal that is designed to preserve the Detroit Institute of Arts collection is fascinating, imaginative and clever. But it’s almost certainly illegal.
And I’ll show you why.
Were it legal, the deal would help solve two very big problems. The first is Detroit’s radically underfunded pensions, which are at least $3.5 billion in the hole, by the reckoning of Detroit Emergency Manager Kevyn Orr . Simple economics says that Detroit needs to slash these obligations. But the pensions are not lavish, and thousands of retired Detroiters depend on the pensions for their daily bread.
On the other side of the tracks is the Detroit Institute of Arts. Unlike most cities, whose art museums belong to separate entities, Detroit has owned its art museum since 1919, when the city was prospering. This means that it could put Bruegel’s “The Wedding Dance” or Matisse’s “The Window” on the auction block to pay creditors. The art world has been scheming to keep the art in Detroit, but creditors have insisted that they are entitled to its value. Added to this are the class — and, unavoidably, racial — implications of lavishing so much attention on art as ordinary Detroiters struggle.
Out of nowhere came the art-for-pensions scheme. The deal calls for Detroit to “sell” its art to a newly created trust that is required to keep the art in the city, using roughly $370 million raised from the Ford, Kresge, Knight and other foundations, $350 million from the state of Michigan (if the Republican legislature agrees) and the institute’s own funds. Not only would the new entity keep the art in Detroit but also the entire $816 million would be used to pay Detroit’s pensioners. The art world and Detroit’s pensioners both win. It’s almost like the deus ex machina solution to a Greek play.
The only problem is the bankruptcy law. A city’s treatment of its creditors in bankruptcy must be “in the best interests of creditors” and cannot “discriminate unfairly.” Best interests means that creditors must get more in bankruptcy than they would outside of bankruptcy; and no unfair discrimination means that Detroit can’t give a much higher recovery to one group of general creditors than to another.
The art-for-pensions deal runs roughshod over both requirements. Because the art would be used to pay only one group of creditors — the pension recipients — the excluded creditors may be worse off in bankruptcy than if Detroit had never filed. And Detroit’s current debt adjustment plan would include this influx of cash in a package that gives pensioners at least 95 percent of what they are owed while giving bondholders less than 20 percent.
In addition to these legal issues, the scheme has put members of the judiciary in an increasingly unjudicial role. The bankruptcy judge has resisted creditors’ requests to investigate the art to determine its value so they could explore alternative arrangements. The chief mediator in the case, a federal judge, has met with representatives of the foundations, lobbying them for money for the deal. Both judges are highly respected, but some worry whether the rule of law is being respected.
If Michigan wishes to help Detroit’s pensioners, it can simply pay them $350 million (or any other amount) outside of the bankruptcy process. Rhode Island did just this after Central Falls filed for bankruptcy in 2011. Detroit also can consider other ways to tap the value of its art while keeping the collection in the city. It can even arrange to give its pensioners somewhat greater recovery than other creditors, as long as the payouts are not wildly disproportionate.
What it can’t do is funnel the proceeds of a valuable asset to a single group of general creditors while excluding everyone else. U.S. bankruptcy law is designed to prevent precisely this kind of abuse.
Read more on this issue:
The Post’s View: Paying the price for Detroit’s fiscal irresponsibility
Robert J. Samuelson: Bankrupt Detroit needs to reinvent itself
The Post’s View: Detroit’s lesson for unions: Ask for what’s fair and sustainable

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