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

[Johnnny5]

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.

The city would probably get more from just one or two of the paintings at the DIA than it would for all of Belle isle. Not only that, but Belle Isle is used by thousands every day and would be missed by the average citizen far more than a Mattise or Van Gogh.

[Cliffy]

The city would probably get more from just one or two of the paintings at the DIA than it would for all of Belle isle. Not only that, but Belle Isle is used by thousands every day and would be missed by the average citizen far more than a Mattise or Van Gogh.

Belle Isle would be taxes every year from property and city income tax. You allow casinos on there and you will be making tens of million per year. You sell a painting and then you're done. No more revenue.

[rb336]

On Belle Isle Conservancy's board:

Sarah Earley [[wife of DTE's CEO)
Cynthia Ford
Joyce Hayes-Giles [[veep @ DTE)

maybe not as strong as the DIA, but these women are not lacking pull

[old guy]

Maybe this was mentioned before, but isn't any piece of artwork donated to a museum subject to certain regulations as to it being sold without the donor becoming the the recipient of such a sale? I'd think there would be some documentation that would specify language of that sort.

[professorscott]

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

I don't know how much there really is to all of this, it may all be smoke and mirrors and it may not be. Also, I am not taking a stand on this issue; I haven't enough detailed knowledge to form an educated opinion and I'm not drunk enough to post the other kind. I will say, though, when it is publicly known that a bankruptcy filing may be in the cards, it is very risky indeed to start hiding assets in such a way as this. Bankruptcy courts take a very dim view of such shenanigans. Protecting the artwork by transferring ownership would have been a useful thing to consider some time ago, but by now I fear that train has left the station.

[DetBill]

Expect huge lawsuits if it affected art work donated by trusts or estates who state the art is to be held by the DIA for the benefit of the community[[ very common). They will most likely demand it back..Wish Mr.Orr would initially done something much more logical, even though much smaller, like let the state get control of Belle Isle as proposed logically earlier, saving a minimum of 6 million a year and let them make vast improvement. It would have went over far better for starts.... Wonder if he is doing this for political maneuvering.

[old guy]

Wonder if he is doing this for political maneuvering.

That would be my guess.

[erikd]

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.

There are many different types of bankruptcies, but they all fall into two basic types: liquidation or restructuring.


Chapter 7 is the common liquidation type of bankruptcy, where a person or business basically says: "fuck this, I'm done." All of the assets are sold off, and the bankruptcy judge divvies up the proceeds from the sale of said assets, and disburses them in the most equitable way that the judge sees fit [[or is agreed to by the creditors.)


Chapters 11 and 13 are the most common types of restructuring bankruptcies, and the forced liquidation of assets in these types of cases are seriously diminished.


In a restructuring type of bankruptcy, there is heavy weight and consideration given to the use and necessity of assets as tools to be leveraged in realistic and sustainable manners to create increased revenue generation, or future cost savings, in order to pay off remaining debts.


For example, in a Chapter 11 bankruptcy, the judge would not force the sale of a $40,000 heavy duty pickup truck if it was the sole vehicle owned by a contact construction worker, and therefore a valuable asset needed by the bankruptcy filer in order to effectively generate future income. However, the same bankruptcy judge would most likely order the sale of that very same pickup truck if it was owned by an accountant or doctor who only used it as a recreational vehicle to tow his boat and jet skis to the cabin up north. It may be the same asset, in front of the same judge, but the way that the asset is used to generate future income and ability to repay debt makes all the difference.


Chapter 9 [[municipal) bankruptcies are necessarily treated as restructuring cases. Cities, counties, and states can not be simply liquidated, therefore all chapter 9 bankruptcies are treated as restructuring cases, and the court can not force the sale of municipal assets. There are situations where the court may penalize the municipality for being unwilling to make common sense sales and/or force reforms, but it is highly unlikely that a bankruptcy judge would over-rule the resistance to liquidate a world-class art museum in order to fund a one-time payment that would only cover 20-33% of debt obligations, while seriously harming future revenue generation and investment.


Detroit's cultural center, and the DIA in particular, are crucial, landmark institutions, on which the nascent rebirth of midtown and the greater city center is founded upon. Liquidation of the DIA art collection would act as a significant deterrent to the city's ability to retain it's tenuous grasp on recent and historical investment, and would certainly serve as a huge deterrent to future investment.


The last thing that an expert in bankruptcy restructuring would ever want to do is liquidate key assets needed to produce future growth and revenue generation.


In my opinion, there is no way that EM Orr will do this, but it is a very effective tactic to show all of the stakeholders involved what a "nuclear option" might look like. This is a wake-up call to all of those who have so far been unwilling to come to the table and negotiate. If we don't embrace common-sense solutions, be it public-private partnerships, increased inter-governmental cooperation, regionalization, or public-sector reorganization, this will ultimately be the end-game scenario.

[stasu1213]

I had thought that the DIA belong to the region and not Detroit. Voters of Southeast Michigan had voted to have $12.00 a year from each taxpayers to fund the DIA. Why is it considered in trouble and why selling off it's assets would be allowed to help the city without the regions consent? The citizens of Michigan should not allow this for we were lead to believe that by us voting yes for a mileage the DIA and it's assets would be spared. There is no telling where or who the money from the assets will go to if they were sold.

[Johnnny5]

I had thought that the DIA belong to the region and not Detroit. Voters of Southeast Michigan had voted to have $12.00 a year from each taxpayers to fund the DIA. Why is it considered in trouble and why selling off it's assets would be allowed to help the city without the regions consent? The citizens of Michigan should not allow this for we were lead to believe that by us voting yes for a mileage the DIA and it's assets would be spared. There is no telling where or who the money from the assets will go to if they were sold.

While pushing the proposal for regional funding I'm sure those at the DIA were well aware that this may [[And probably would be) an issue in the near future. Of course they denied it before November's election and some are still denying it today. Even so, I'm sure they were preparing for it and the 20 million in taxes they are receiving every year will help them fight it in the courts.

[Honky Tonk]

While pushing the proposal for regional funding I'm sure those at the DIA were well aware that this may [[And probably would be) an issue in the near future. Of course they denied it before November's election and some are still denying it today. Even so, I'm sure they were preparing for it and the 20 million in taxes they are receiving every year will help them fight it in the courts.

The fact that the proposal passed in three counties, 2 of them hard core 'burbs, should tell you something about how people feel about the DIA. I'm sure the people running the DIA looked @ the mentality of the City government and realized that an attempt to sell it off as a last ditch incompetent effort to save themselves, would be a possibility, so what did they do? They PREPARED for that possibility. Kudos to them for their foresight. Maybe they could give management tutorials to the Mayor and City Council?

[Mark Smiles]

The EM wasn’t the one who elected the City Government leaders, who voted to spend all the borrowed money.

The voters of the Metro area, outside of Detroit are not the ones who elected the City Government leaders, who voted to spend all the borrowed money.

In fact, when Kwame was re-elected one of his campaign points, that helped him win re-election, was folks in the suburbs, tended to like the other guy?

So now when it is time to pay back the borrowed money, the blame for the unpleasantness, falls on the the EM, or this is a “regional problem”.

Spending borrowed money, that one has no intention of paying back, is no different than passing a bad check.

Who endorsed the “bad Check”?

The voters of Detroit.

Now if the voters are not responsible for their decisions, why vote?

[townonenorth]

I don't know how much there really is to all of this, it may all be smoke and mirrors and it may not be. Also, I am not taking a stand on this issue; I haven't enough detailed knowledge to form an educated opinion and I'm not drunk enough to post the other kind. I will say, though, when it is publicly known that a bankruptcy filing may be in the cards, it is very risky indeed to start hiding assets in such a way as this. Bankruptcy courts take a very dim view of such shenanigans. Protecting the artwork by transferring ownership would have been a useful thing to consider some time ago, but by now I fear that train has left the station.

I can't say that transferring assets makes any difference NOW, either. But I think that protecting the assets from a sale, somehow, would make more sense than banking on an argument that could fail in court.

[Honky Tonk]

I don't know how much there really is to all of this, it may all be smoke and mirrors and it may not be. Also, I am not taking a stand on this issue; I haven't enough detailed knowledge to form an educated opinion and I'm not drunk enough to post the other kind. I will say, though, when it is publicly known that a bankruptcy filing may be in the cards, it is very risky indeed to start hiding assets in such a way as this. Bankruptcy courts take a very dim view of such shenanigans. Protecting the artwork by transferring ownership would have been a useful thing to consider some time ago, but by now I fear that train has left the station.

Ain't THAT the truth.

[softailrider]

Belle Isle would be taxes every year from property and city income tax. You allow casinos on there and you will be making tens of million per year. You sell a painting and then you're done. No more revenue.

I wouldn't hold my breath waiting for that casino to be built on Belle Isle.

[canuck]

I wouldn't hold my breath waiting for that casino to be built on Belle Isle.

Well unless they went ahead and built a fancy Dubai-like billionaireville on the island, which is highly unlikely and severely undesirable; a casino wont happen.

For one thing, Detroit's casinos are exactly where they are supposed to be, especially regarding Detroit's needs, those of the public and of the casinos.

Montreal's only casino is on Notre Dame island in the middle of the river where the Grand Prix is held. They keep adding onto it but would love to move it closer to downtown if they could, which it is relatively speaking, maybe a ten minute drive. But to think of Belle Isle as some kind of an exclusive playland for the rich is sad. It is also wrong. Downtown is the ideal place for any development because it is where developers will be able to play off one another's property values, and since we're in a capitalist system, right or wrong, that is the better solution for a resurgence of the city from the core outward.

Belle Isle needs to be a park, a better park maybe, but nothing else. Likewise, the DIA collection is more than a bunch of old bills hidden in a stocking, it represents Detroit's important ascension in the world, and frankly, with all its problems, the city is more the sum of all its parts, namely; the metropolitan area. And this is where a chance at convergeance of interests may provoke a political merger of sorts. That is my hope.

[coracle]

".....the city is more the sum of all its parts, namely; the metropolitan area. And this is where a chance at convergeance of interests may provoke a political merger of sorts. That is my hope."

God forbid we merge in any sort of way with Detroit politics - they don't work. It would turn out to be a continual transfer of monies one way only and provoke the beginning of the demise of the cities that had to contribute their taxes.

[canuck]

"
God forbid we merge in any sort of way with Detroit politics - they don't work. It would turn out to be a continual transfer of monies one way only and provoke the beginning of the demise of the cities that had to contribute their taxes.

Not the same old same old, but something with a Clint Eastwoody type at the helm. And maybe a robocop or two.

[old guy]

Well unless they went ahead and built a fancy Dubai-like billionaireville on the island, which is highly unlikely and severely undesirable; a casino wont happen.

For one thing, Detroit's casinos are exactly where they are supposed to be, especially regarding Detroit's needs, those of the public and of the casinos.

Montreal's only casino is on Notre Dame island in the middle of the river where the Grand Prix is held. They keep adding onto it but would love to move it closer to downtown if they could, which it is relatively speaking, maybe a ten minute drive. But to think of Belle Isle as some kind of an exclusive playland for the rich is sad. It is also wrong. Downtown is the ideal place for any development because it is where developers will be able to play off one another's property values, and since we're in a capitalist system, right or wrong, that is the better solution for a resurgence of the city from the core outward.

Belle Isle needs to be a park, a better park maybe, but nothing else. Likewise, the DIA collection is more than a bunch of old bills hidden in a stocking, it represents Detroit's important ascension in the world, and frankly, with all its problems, the city is more the sum of all its parts, namely; the metropolitan area. And this is where a chance at convergeance of interests may provoke a political merger of sorts. That is my hope.

I have to agree with all of that. There are always better options. Preserve what you have. You have a beautiful city with historic significance. Don't lose it.

[coracle]

There are always better options. Preserve what you have. You have a beautiful city with historic significance. Don't lose it.

True. Who can disagree with platitudes?

[canuck]

God forbid we merge in any sort of way with Detroit politics - they don't work. It would turn out to be a continual transfer of monies one way only and provoke the beginning of the demise of the cities that had to contribute their taxes.

It seems to me that God would probably stroke his beard and smile a benign platitudinal smile if a continual transfer of guilt were to stop suddenly.

[coracle]

It seems to me that God would probably stroke his beard and smile a benign platitudinal smile if a continual transfer of guilt were to stop suddenly.

Like your last posting #68 I don't really know what this means, but I can understand why you feel guilt.

[canuck]

I am talking about those who claim that responsibility for the problems of Detroit rests solely on the voters, the administration and the union employees, the baptist ministers, the ghetto mentality of the city of Detroit. Transfer of guilt is unhelpful in that sense because when you wear that Tigers cap, you have to remember it represents more than a part of its sum.

[bailey]

From saturday's DetNews, it would seem that Orr is basically calling out the DIA for not doing anything to shield the art. Frankly I'm a bit shocked after all this time the very wealthy and well connected major donors and backers didn't firewall the collection from the CoD decades ago.

Nowling also blasted the DIA for failing to act when restructuring consultants approached the DIA two months ago to warn of "a potential huge liability for them."

"They've been negligent to date in trying to find a way to protect a tremendous cultural asset, not only of the city, but of Michigan and the world," Nowling said. "Burying your head in the sand is not the right option that they should be looking at."
......


DIA spokeswoman Pamela Marcil said earlier Friday the city is not allowed to sell off assets because of an agreement with the DIA that says the museum will operate according to professional standards. Selling off art would violate standards set by the American Association of Museum Directors, which has accredited the DIA.


...

But in a Chapter 9 filing, the agreement between the city and the DIA would be thrown out, Nowling said.


"It's a contract, like all other contracts," he said. "So what you have left is a city asset sitting on the table."


While federal bank law prohibits any liquidation of assets, creditors can sue Detroit for payments — and they could demand Detroit sell off assets to settle those debts, Nowling said.


Detroit owns the majority of the 66,000 pieces of art and the building, but the DIA is the caretaker.


Nowling stressed there's currently no plan to sell any art and that this is a "precautionary measure" to inform the DIA that if Detroit is pushed into bankruptcy "we're not sure we can protect the assets from the creditors."


"We recognize the cultural impact and significance of the DIA for the city," he said. "Quite frankly, we're bemused that it's taken them over two months to finally react to what we think is a huge liability."


From The Detroit News: http://www.detroitnews.com/article/2...#ixzz2UbIPd19b

[jiminnm]

On Belle Isle Conservancy's board:

Sarah Earley [[wife of DTE's CEO)
Cynthia Ford
Joyce Hayes-Giles [[veep @ DTE)

maybe not as strong as the DIA, but these women are not lacking pull

Tony Earley left DTE 2 years ago and is now CEO of PG&E. I did read that they have kept a house in the area.