Kevyn Orr Has Let It Hit The Fan [[Threatens to Sell DIA Artwork)

[EastsideAl]

Yeah, because the sale of some artwork would really sting Detroit's image. I'm sure that's what going to put the nail in the coffin, not the fact that Detroit has over 10k abandoned homes, averages a murder per day and has 4 out of the top 10 most violent neighborhoods in the U.S.

But unlike any of those other things, this would gain not just some national attention, but worldwide attention at a headline level. And, like Bailey says, it would scare off anybody from ever giving us anything of value for the foreseeable future.

[old guy]

Most people outside of Detroit didn't give a shit that Detroit had to close fire and police stations, they didn't care that Detroiter's don't know if someone will show up when 911 is called and that people are dying because of it. They hardly cared about any of this, but God forbid someone even suggest that they may have to sell some city owned paintings that most of the Detroit's residents have never even seen or heard of before.

I'd have to disagree with that. Many people outside of Detroit or Michigan do care about what's happening there. Some of it stems from compassion, but a lot of it is also based on the fact that most people in this country know we're just a few steps behind Detroit.
We're all in this together and it's not a pretty picture.

[JBMcB]

Traditionally [[and as encoded by law) the procession of bankruptcy disbursements is as follows:

1 - Federal government - anything owed to the fed gets paid out first

2 - Secured debt holders - Mortgage holders, secured bonds, lease holders, etc...

3 - Unsecured debt holders - Unsecured bonds and loans with no collateral, account parables to suppliers, customers, etc...

4 - Everyone else - Stockholders, employees, etc...

I believe all municipal bonds are in the second category, as they are backed by "the full faith and credit" of the issuer.

As for being able to force the city to liquidate assets, I think the question is up in the air, as I don't think it's been raised in past municipal bankruptcies. Especially as, since the GM/Chrysler bailouts, the federal government can apparently ad-hoc tinker with the disbursement rules and, as long as a federal bankruptcy judge goes along with it, there isn't much you can do about it as a bondholder.

[canuck]

Yeah, because the sale of some artwork would really sting Detroit's image. I'm sure that's what going to put the nail in the coffin, not the fact that Detroit has over 10k abandoned homes, averages a murder per day and has 4 out of the top 10 most violent neighborhoods in the U.S.


Most people outside of Detroit didn't give a shit that Detroit had to close fire and police stations, they didn't care that Detroiter's don't know if someone will show up when 911 is called and that people are dying because of it. They hardly cared about any of this, but God forbid someone even suggest that they may have to sell some city owned paintings that most of the Detroit's residents have never even seen or heard of before.

Of course you are totally right about how callous people are about the "situation" in Detroit.

But you know, now that a collection that was given or financed by the wealthiest families in the region for a hundred years seems to be close to the auction block, the moneyed people are looking at this very closely. Anybody that gives artworks to a museum signs a release with clear restrictions.

I cannot imagine the powerbrokers letting a bunch of Picassos their fathers bequeathed when a "good" Picasso can bring in 50 million. There is probably a lot more than 3 billion dollars worth of objects in the DIA. I was looking at the collection and Bruegel's the Wedding Dance alone will probably build you a hefty skyscraper nowadays.

I dont think the Youknighted States government would let a city's treasure chest of art ever be disseminated this way.

That said, yes, the city is in need of more security, more of everything, but that doesnt mean it needs to impoverish itself in this way. I'd find a way of chopping a coupla F35's from the Air Force grocery bill and solve that and other problems in Detroit.

[Honky Tonk]

Yeah, because the sale of some artwork would really sting Detroit's image. I'm sure that's what going to put the nail in the coffin, not the fact that Detroit has over 10k abandoned homes, averages a murder per day and has 4 out of the top 10 most violent neighborhoods in the U.S.


Most people outside of Detroit didn't give a shit that Detroit had to close fire and police stations, they didn't care that Detroiter's don't know if someone will show up when 911 is called and that people are dying because of it. They hardly cared about any of this, but God forbid someone even suggest that they may have to sell some city owned paintings that most of the Detroit's residents have never even seen or heard of before.

A better idea would be to take all the taxpayer funds from the magic 3 mile choo-choo, and taxpayer funding for Illitch's newly proposed hockey stadium, put those on hold, and use the money to salvage Detroit? Then after a few hundred thousand people move into mid-town and start paying Detroit taxes, we'll pay off the debt, build up a reserve, then we can start funding fun projects. What do you think?

[Danny]

Folks in the Tri-County Area can get in free. But the DIA is selling art. PITIFUL!

[Cliffy]

I don't see it happening. Too many rich and powerful people are involved with the DIA.

[1953]

I like to think Orr is playing the 'nuclear option' card here, and I agree that selling the city's art would be a last and very hard road to go down. However, this is a real threat, and we all need to do what ever we can to see that it is not realized.

Art may not seem as important as police in neighborhoods, but the museum and its collection have very significant economic benefits to the city and region, and they are key parts of the regional identity. If they go, we all might as well follow them to their new homes.

[Jimaz]

Where's that goofy "leverage the value of the DIA's collection" guy when you need him?

That was Coaccession.

It wasn't the easiest time to promote a new idea like that, right after Wall Street invented all those investments that crashed the global economy. People are understandably wary of financial inventions now.

[Johnnny5]

Detroit [[the region, not the City of) is not going to lose this artwork. It will be on the table, for sure, but it's not just a mattero when, but also a matter of how. Detroit, the city, may lose "ownership" of the art.

I have a feeling the scenario looks like this: The State [[or some other regional entity created with state backing) might have to end up purchasing the artwork from the City. The state [[with its credit rating) could issue some really long-term bonds paying pretty low interest using the artwork as collateral. The DIA museum might have to add the interest cost as "rent" that it pays to the entity. This interest cost would then result in higher operating expenses [[but not by too much). This extra expense might need to be made up via capital campaign, increased endowment, etc.

If it does come down to the DIA holdings, IMO the above would probably be a best case resolution. I'm just not quite sure it would even be possible [[Politically or otherwise). It would be very difficult to put a value on everything, and unless everyone was made whole, I doubt those owed would happily go along with selling/transferring the works for anything less than market value.

[Novine]

Sounds like posturing. Everything that I've read says that a federal judge can't force the city to sell assets in bankruptcy. The city might choose to but that would put it back on Orr and Snyder, not a federal judge.

[softailrider]

A better idea would be to take all the taxpayer funds from the magic 3 mile choo-choo, and taxpayer funding for Illitch's newly proposed hockey stadium, put those on hold, and use the money to salvage Detroit? Then after a few hundred thousand people move into mid-town and start paying Detroit taxes, we'll pay off the debt, build up a reserve, then we can start funding fun projects. What do you think?

I want some of what your smoking, it must be some good shit.

[hortonz]

I expected apathy and indifference from Canada's neo-fascist Conservative government when it came to this country's struggling urban centers but for God's sake isn't the Obama administration a LITTLE more enlightened that the Tea Party government in Canada? After all, didn't 99% of the city's residents vote for him in 2008 and 2012? Where are the bold solutions that are needed to save cities like Detroit and Cleveland from the Republican parasites who think destroying America's old industrial cities will destroy the Democratic party?

[rb336]

I believe most of the donations are "in perpetuity" - the terms of the gifts, whether of art or of money for the purchase of art, preclude them being sold off, except under very specific circumstances

[renf]

The city of Harrisburg Pennsylvania sought bankruptcy in federal court. I
believe their creditors contended that the city had assets that they were
unwilling to sell to pay their debts. I believe the federal courts turned down
the city's request for bankruptcy and the State of Pennsylvania stepped into
the controversy.
If the city of Detroit seek bankcuptcy protection in federal court, the city will have to list all of its assets including the art works at DIA if the city really has title to them. The lawyers for the creditors are only interested in getting full payments of all they think is due to them. However, I assume that DIA would fight this in court for a very long period.

[Cliffy]

Look at the names on the board of directors

Edsel Ford II
Alfred Taubman
Dennis Archer
Eugene Applebaum

No need to worry. Snyder has probably gotten a phone call on this today by one of these people. The Art work is going no where.

[rex]

yo canuk. Whats a nascent stage?

[mwilbert]

Sounds like posturing. Everything that I've read says that a federal judge can't force the city to sell assets in bankruptcy. The city might choose to but that would put it back on Orr and Snyder, not a federal judge.

1) You are correct that the sale of municipal assets cannot be forced in a Chapter 9 bankruptcy.

2) The judge does not have to [[and presumably will not) approve a bankruptcy plan that he doesn't think is equitable. If the judge does not approve a bankruptcy plan, the city has to resume operating without bankruptcy protection. In that case, if the city can avoid defaulting on its obligations, presumably by ceasing pretty much all other operations in Detroit's case, the assets are safe. If not, then once default occurs the creditors can go to court and start trying to seize assets, probably including art. Whether or not that happens, the city government will be effectively paralyzed because no one is going to want to do business with it under conditions of such uncertainty.

so

3) If we get to bankruptcy, we have to hope that the judge thinks that not including DIA art in the city's proposed settlement is equitable. And that the almost inevitable appeals court agrees.

[compn]

obama saved detroit/michigan once with the auto bailout.

you want obama to find bin laden AND jimmy hoffa?? hehe

[canuck]

yo canuk. Whats a nascent stage?

Burgeoning; the beginning of... something.

[canuck]

obama saved detroit/michigan once with the auto bailout.

you want obama to find bin laden AND jimmy hoffa?? hehe

If Obama follows that garbage truck, he may find a bin laden with a jimmy hoffa.

[313WX]

The city of Harrisburg Pennsylvania sought bankruptcy in federal court. I
believe their creditors contended that the city had assets that they were
unwilling to sell to pay their debts. I believe the federal courts turned down
the city's request for bankruptcy and the State of Pennsylvania stepped into
the controversy.
If the city of Detroit seek bankcuptcy protection in federal court, the city will have to list all of its assets including the art works at DIA if the city really has title to them. The lawyers for the creditors are only interested in getting full payments of all they think is due to them. However, I assume that DIA would fight this in court for a very long period.

Per the below link, the reason Harrisburg's bankruptcy filing was denied was because not all of its municipal branches of government had agreed to the filing.

http://online.wsj.com/article/SB10001424052970204452104577056462180868008.html?m od=googlenews_wsj

[coracle]

DIA is a product from an earlier age which has flourished while the City has continued to diminish in tax paying population. If it cannot be sold then it is not a financial asset. Everybody in the State is generally of the opinion that the cultural value is of such enormous importance in the World that it should not be broken up; so why not donate ownership and liabilities to the State, to be reviewed after 100 years. It will remain in Detroit and still be the DIA. If it's sale is forced by Bond Holders and it is broken up it may marginally ease the pressure for a time but its value will be lost forever and the proceeds from the sale will quickly be used up.

[townonenorth]

DIA is a product from an earlier age which has flourished while the City has continued to diminish in tax paying population. If it cannot be sold then it is not a financial asset. Everybody in the State is generally of the opinion that the cultural value is of such enormous importance in the World that it should not be broken up; so why not donate ownership and liabilities to the State, to be reviewed after 100 years. It will remain in Detroit and still be the DIA. If it's sale is forced by Bond Holders and it is broken up it may marginally ease the pressure for a time but its value will be lost forever and the proceeds from the sale will quickly be used up.

To the state? NO. I don't trust them at all to do anything near the right thing. Donate to the non-profit DIA.

[noggin]

The city would get a much better return by selling Belle Isle. Remember all the folks in Detroit yapping about losing all the city gems? Because they would not let them go the opposite will happen.