Judge Rhodes Rules Detroit Is Eligible For Bankruptcy

[corktownyuppie]

Free Press listed a series of interesting scenarios...Logical possibilities. Meanwhile, Danny, go away.

So logical, in fact, it has me wonder why it took all these years, a bankruptcy filing, and then a judge's ruling before getting it done.

[detroitsgwenivere]

^^ Did someone hack your account?

[sumas]

Yes, Judge says,"SELL IT ALL!"

That;s Bull s***.

[Wesley Mouch]

hahahahahahahahahahahaha. Best laugh in days. Just like the 'solidarity' of the UAW that supported two tier wages?

Unions act a lot like a club. If you're a member, they'll look out for you. If you're an outsider, forgetaboutit.

[MikeyinBrooklyn]

hahahahahahahahahahahaha. Best laugh in days. Just like the 'solidarity' of the UAW that supported two tier wages?

Totally. Many years ago, when I was a young waiter, I was forced to be a member of HERE. The state head of the union was a regular, and he would never tip us. Just loved paying for his fancy car out of my check.

[Cincinnati_Kid]

I think this is good for workers, generally, though not good for the Detroit pensioners.

The sooner we can get away from defined benefit pensions, the better for workers. I don't even expect Social Security to be there for me as a thirtysomething, let alone any muni or company's pension.

I also disagree with getting away from defined benefits is better for workers, due to the fact most workers don't have a clue about investing and don't save enough money on their own.

[BankruptcyGuy]

Free Press listed a series of interesting scenarios:

■ Orr might shield the city’s oldest and poorest retirees and cut deeper into the pensions of younger, somewhat better off retirees.
■ He might impose the cuts equally across the board but phase them in over a number of years, in effect offering a measure of protection for older retirees.
■ He might cap pension payments at some basic amount, requiring cuts only to those getting the biggest retirement checks.
■ Orr could leave pensions for current retirees relatively intact but impose deeper cuts on the active workers who remain years short of retirement age.
■ He might impose smaller cuts on the city’s retired police and firelighters because their pension fund, the Police & Fire Retirement System, is in somewhat better shape than the General Retirement System fund for the city’s non-uniformed retirees.

Logical possibilities. Meanwhile, Danny, go away. You're not funny.

You never know, but I think the Freep is looking at this the wrong way. The amount at issue is the unfunded portion. The City will pay x% of the unfunded portion. I don't know how much the City will have to say about how the shortfall is distributed.

At this point, I'd like to add the following editorial comment: "Gee, maybe the pensioner's attorneys should have thought of this before they argued that the pensions were actually fully funded." Again, a stupid argument that will now hurt their bargaining position.

[old guy]

Maybe someone [[Danny?) was just being sarcastic, but as far as the DIA artwork, I thought I read an article that said the judge thought selling it was a bad idea. I don't know what power he has to decide that and I think he was just making a statement. He was saying that the collection was worth 2 billion or less and it wouldn't make sense, but it would anger a large number of people.

[old guy]

Oh, I just noticed that begingri had started a thread about that.

[MikeyinBrooklyn]

Although I would hate to lose any DIA art, and will be happy if it doesn't happen, I can't understand the logic of not selling at least some of it. If someone owes you money and you get a lien against their property, they can't claim that a huge amount of their assets are exempt from the lien because the stuff has sentimental value for them. It's absurd. If I were owed money by the city, and they couldn't pay it all, to be told simultaneously that they're hanging onto the art anyway would infuriate me. The only legal reasoning I can imagine is if selling off of significant artworks would spell legal trouble with millage [[possibly voiding it, and causing the city more financial burdens in subsidizing the museum) or if a lot of works are deeded specifically only to the DIA, which might preclude a sale. I just think it's odd to think of a family having trouble putting food on the table and keeping lights turned on refusing to part ways with the pretty pictures on the walls. Like I said, I hope we don't lose any art. I just can't wrap my brain around how we can get away with NOT selling it.

[Vic01]

I also disagree with getting away from defined benefits is better for workers, due to the fact most workers don't have a clue about investing and don't save enough money on their own.

Without a "defined", "guaranteed" pension plan [[and as the social security system crumbles) it's a sure thing that folks would get a clue and start saving...

[Gistok]

Although I would hate to lose any DIA art, and will be happy if it doesn't happen, I can't understand the logic of not selling at least some of it. If someone owes you money and you get a lien against their property, they can't claim that a huge amount of their assets are exempt from the lien because the stuff has sentimental value for them. It's absurd. If I were owed money by the city, and they couldn't pay it all, to be told simultaneously that they're hanging onto the art anyway would infuriate me. The only legal reasoning I can imagine is if selling off of significant artworks would spell legal trouble with millage [[possibly voiding it, and causing the city more financial burdens in subsidizing the museum) or if a lot of works are deeded specifically only to the DIA, which might preclude a sale. I just think it's odd to think of a family having trouble putting food on the table and keeping lights turned on refusing to part ways with the pretty pictures on the walls. Like I said, I hope we don't lose any art. I just can't wrap my brain around how we can get away with NOT selling it.

I'm surprised you can't see why this isn't a very bad idea....

Detroit will become the example by which every other city in the country will spin off their minicipal museums so that they will be protected from every having to go thru what Detroit potential will. They will learn from Detroit's suffering.

The sale of DIA artwork will inflict a serious wound for the DIA for a very long time, as far as future art donors goes. One of the 3 largest private art collections in the country belongs to Richard Manoogian, Chairman Emeritus of the DIA Founders Society [[included in his collection is his crown jewel... George Caleb Bingham's Jolly Flatboatmen, one of the 5 most important early 19th century American paintings in existence). If the DIA sells... then this will likely guarantee that his collection is NEVER donated to the DIA, as would be the artwork of countless others. The Ford Family has Edsel & Eleanor Ford's "loaned" collection, including Van Gogh [[Roulin Mailman, the finest of the DIAs Van Gogh's), a Degas, Cezanne, and other works that could be pulled from the DIA.

There are MANY on loan pieces that could end up never being bequested to the DIA, as well as future donations. Art collectors/curators nationwide are horrified at the prospects of a DIA sale.

One needs to remember that the worlds richest museum is the Getty in LA. However all it has ever been able to get its' hands on in the last 50 years for the most part has been 2nd tier artwork... with the first tier art tied up in museums around the world. If the DIA sells its' first tier art [[Brueghel's Wedding Dance, Van Gogh's Self Portrait, Church's Cotopaxi, Rembrant's Visitation, Matisse's Garden Window, etc. then we will just end up as another middling 2nd tier museum like the Getty, but without an endowment.

Now that the DIA has finished it's massive expansion, it has been working on getting its' endowment [[private donations for future acquisitions) built up to match that of other first tier USA art museums. Sell DIA artwork, and you can be guaranteed that will spell doom for the endowment effort.

Also, selling first tier artwork of the DIA, will almost guarantee that some of it will leave the USA forever. Foreign countries and oil sheiks will pay a beautiful dollar to get their hands on some of the best art. Just look at the recent megadollars spent on several enormous pink and blue diamonds sold at auction as of late... they all went to Asia.

Selling DIA artwork sends a bad message to potential donors/philanthropists, and diminishes the prestige of the institution. A bad idea.

[mikefmich]

Wow....Manoogian has Bingham's Jolly Flatboatmen? I didn't know that, and I love Bingham's work immensely.

As you say Gistok.....selling off the DIA treasures would be horrendous, and terribly short sighted on many levels.

Would I be correct in thinking some of the work donated to the DIA would have caveats included in that donation, to not allow this happening?

[Gistok]

Thanks mikefmich! Yes Manoogian has Bingham's Jolly Flatboatmen. It was hanging in the National Gallery in Washington when Manoogian bought it from another art patron some time ago. As part of the sale, Manoogian has to leave the painting in the DC museum for a set number of years before he can have it moved.
http://0.tqn.com/d/arthistory/1/0/Q/...ma_1109_09.jpg

The DIA crown jewel of moveable art has to be WEDDING DANCE by Pieter Brueghel the Elder. Of the 45 Brueghels known worldwide, only 6 are outside of Europe. The DIA has arguably one of the 1/2 dozen finest of his paintings. It was found hanging in a British manor house in 1930, and legendary DIA Director Valentiner [[he commissioned the Rivera Murals) bought it sight unseen.

As to donations, yes there are enough caveats in a lot of DIA artwork that was donated to tie up artwork sale in legal wrangling for years. The DIA patrons have the very deep pockets necessary to assure a looooong legal road ahead for any attempt at plundering the DIA collections.

Since Judge Rhodes seems to be sympathetic to avoiding a DIA sale... he would likely allow legal appeals to proceed.

[mikefmich]

Another ramification that pops into my mind.....in a city that has already lost so much...can they afford to just become an emptier shell than they already are?
When I was still living in the area, out of town friends would visit and say.....take me to the DIA? Since Art History was my major, they didn't have to twist my arm very much.

[MikeyinBrooklyn]

I'm surprised you can't see why this isn't a very bad idea....

I already understood everything you wrote, but your post fails to point out why a court shouldn't [[legally) insist on selling some of the art. The advantages and qualities of the DIA are not a legal argument. This is a court case. I'm a member, and I have given memberships away as Christmas presents. The argument for saving the art is not on par with not closing firehouses.

[Baselinepunk]

Thanks mikefmich! Yes Manoogian has Bingham's Jolly Flatboatmen. It was hanging in the National Gallery in Washington when Manoogian bought it from another art patron some time ago. As part of the sale, Manoogian has to leave the painting in the DC museum for a set number of years before he can have it moved.

The DIA crown jewel of moveable art has to be WEDDING DANCE by Pieter Brueghel the Elder. Of the 45 Brueghels known worldwide, only 6 are outside of Europe. The DIA has arguably one of the 1/2 dozen finest of his paintings. It was found hanging in a British manor house in 1930, and legendary DIA Director Valentiner [[he commissioned the Rivera Murals) bought it sight unseen.

As to donations, yes there are enough caveats in a lot of DIA artwork that was donated to tie up artwork sale in legal wrangling for years. The DIA patrons have the very deep pockets necessary to assure a looooong legal road ahead for any attempt at plundering the DIA collections.

Since Judge Rhodes seems to be sympathetic to avoiding a DIA sale... he would likely allow legal appeals to proceed.

Great information.


I haven't been able to tell if that appraisal is market or insured. If it's market I'm pretty sure that we can add another 20% to that 2B number for the auction house's cut on the sale.

One cock-block regarding selling cultural heritage that I did not consider was the possibility of the appraisal coming in so low. Yes, I assumed like most folks that once treasure chest was cracked wide open that the number would have been closer to 8 million. It's no secret that Orr is / was trying to squeeze [[read: exhort) the DIA and the philanthropic community of any where between 200 and 500 million dollars; depending on which reports you read. He's gotta be pretty pissed off right now; I'm sure he was licking his choppers over the artwork. Getting that number is going to prove near impossible now that the value is so low. It also kills stupid ass ideas / scams that have been peddled recently regarding monetizing the artwork.


Now I wonder if there may other "forces" that are protecting the artwork; perhaps in a de facto way. Did the auction house do a "solid" to the DIA because of the bad press they got doing the appraisal? Did the recent discovery of 1,000 + pieces of artwork that was stolen by the Nazis in WWII drive down the market price? The threat of 400 + pieces hitting the market drives the market price down? Are the pieces considered "toxic" if they hit the market driving the price down? Perhaps it's just happenstance . . . ?

Either way it looks like a huge loss for the corporate raiders of the DIA; Geckko would be most disappointed.

[BankruptcyGuy]

I already understood everything you wrote, but our post fails to point out why a court shouldn't [[legally) insist on selling some of the art. The advantages and qualities of the DIA are not a legal argument. This is a court case. I'm a member, and I have given memberships away as Christmas presents. The argument for saving the art is not on par with not closing firehouses.

The court cannot insist that art [[or anything else) be sold. It is outside of the scope of powers in Chapter 9. Chapter 9 differs in that way from Chapter 11 [[corporate bankruptcy) where the court can insist that assets be sold.

[MizMotown]

Banks and corporations get BAIL OUTS. People get screwed. The state and it's f*cked auditing along with the cities let this happen. Keep bending over. As long it's not effecting YOU personally why should anyone give a shit?! It may be what it is but that doesn't deny the fact, it's stinky!

[MizMotown]

not everyone is in a position to save enough for retirement and live day to day. just the facts. especially in country who's people are ok with $10 an hour jobs and higher costs of living, outsourcing, and undeniable greed.

[Kevgoblue]

not everyone is in a position to save enough for retirement and live day to day. just the facts. especially in country who's people are ok with $10 an hour jobs and higher costs of living, outsourcing, and undeniable greed.

Great point!
Sad, but so many are not just "ok" with that idea but revel in it. If it means that they can get a pair of knockoff Hanes socks at Dollar General for $0.50 less then they're all for it.

You'd think with this bankruptcy going through you'd hear more conversation about the effect of losing local [[domestic) jobs. Detroit is the first major city in this situation, but not the last.

[Vic01]

...The state and it's f*cked auditing along with the cities let this happen...

Which came 1st the chicken or the egg? Is "The state and it's f*cked auditing" primarily responsible and primarily the cause of the mess? or does "the cities let this happen" mean that they primarily responsible and primarily the cause?

My thought is that badly chosen, corrupt, "elected officials" played one of the biggest roles in this mess. And like it or not... because they were elected by the voters and the non-voters alike, there's lots of responsibility to spread around.

The "State" has some responsibility, but when your elected officials make this big a mess who's really to blame? Look in the mirror, then reply...

[Kevgoblue]

My thought is that badly chosen, corrupt, "elected officials" played one of the biggest roles in this mess. And like it or not... because they were elected by the voters and the non-voters alike, there's lots of responsibility to spread around.

The "State" has some responsibility, but when your elected officials make this big a mess who's really to blame? Look in the mirror, then reply...

Seems too simple a response. Especially considering that there are numerous other major cities facing the same dilema. And without having undergone the seismic economic implosion to the magnitude that Detroit has experienced. Cities being questioned include Chicago, Cincinatti, Philadelphia, Fresno and quite a few others. The U.S. is losing its manufacturing base. Those locations are feeling the economic pinch. Yet at the same time they still face the legacy costs associated with their former prosperity. They also tend to be older cities, which are experiencing higher costs associated with maintenance of their infrastructure. Roads, bridges, water mains, etc.

[corktownyuppie]

The court cannot insist that art [[or anything else) be sold. It is outside of the scope of powers in Chapter 9. Chapter 9 differs in that way from Chapter 11 [[corporate bankruptcy) where the court can insist that assets be sold.

I was teaching a class today, and a person asked the same question that MikeyinBrooklyn did.

Obviously, BKGuy is an attorney, and so that's the legal answer. The reasoning behind it [[I infer) is that unlike a corporate Chapter 11 -- where assets are liquidated to pay off debts until the corporation is empty and then dissolved -- in a municipal bankruptcy, the City still has to continue to exist long after bankruptcy.

50 years from now, most of the pensioners will be dead, but the city will still exist.

And so asset sales must have a different standard than simply, "sell it all, and divide the proceeds with the creditors". Orr, in fact alluded to this when he first arrived in Detroit, stating [paraphrasing], "You don't want this to go to bankruptcy court; the law tilts far in favor for the city [[and against creditors) in bankruptcy court."

Another way of looking at this is that there are certain city assets which make it a desirable place to live. If you sell off too many of those assets, then what will be left will not be a sustainable municipal entity anymore. We sell all the riverfront property to Canada. We sell all of the parks to developers.

Now that said, just because the Court can't insist that assets be sold, can the Court also reject the city's proposed Plan of Adjustment?

If so, Rhodes can use that hammer to "strongly encourage" monetization and also turn around to the pensions and "strongly encourage" a settlement, rather than taking this all the way the Supreme Court.

Next 3-6 months will be interesting indeed.

[Wesley Mouch]

Seems too simple a response. Especially considering that there are numerous other major cities facing the same dilema. And without having undergone the seismic economic implosion to the magnitude that Detroit has experienced. Cities being questioned include Chicago, Cincinatti, Philadelphia, Fresno and quite a few others. The U.S. is losing its manufacturing base. Those locations are feeling the economic pinch. Yet at the same time they still face the legacy costs associated with their former prosperity. They also tend to be older cities, which are experiencing higher costs associated with maintenance of their infrastructure. Roads, bridges, water mains, etc.

You are right that there isn't solely because of bad local leadership. We have a lot of bad leadership all across the country. We are far from alone on this.

We are however near the back of the pack. And the lions and tigers you mention above are coming in for the kill. The whole pack is weak right now -- and we're the weakest.

Its much too simple to blame others for everything, too. We are to blame in so many ways that most cities -- even rust belt cities are not.