About that DIA rescue...

[Gannon]

Listening to the WDET news report on the group that is working to get the DIA removed from the Detroit bankruptcy got me wondering...


...isn't it illegal to attempt to remove tangible assets from an on-going bankruptcy proceeding? In any other case, there would be people crying out against the injustice of the rich buying out their favorites.


But seriously, Bankruptcyguy or any of the professors and lawyers...how legal is it to hide or otherwise make unavailable ANY asset in a bankruptcy, once it has been filed?!

[Gistok]

Gannon, the state removed Belle Isle from the equation... so a precedence has been set. But it does make for an interesting debate...

[iheartthed]

Gannon, the state removed Belle Isle from the equation... so a precedence has been set. But it does make for an interesting debate...

Detroit still owns Belle Isle. They only leased it to the state.

[Wheels]

Detroit still owns Belle Isle. They only leased it to the state.

You fell for that?

[Gannon]

You fell for that?

Most everybody did, far as I can tell.


Come ON, where's that Bankruptcydude, or whatever he called himself? Always on top of the questions about this largest of all bankruptcies...

[Honky Tonk]

You fell for that?

Maybe he actually READ the agreement? Straight.....

[bailey]

Listening to the WDET news report on the group that is working to get the DIA removed from the Detroit bankruptcy got me wondering...


...isn't it illegal to attempt to remove tangible assets from an on-going bankruptcy proceeding? In any other case, there would be people crying out against the injustice of the rich buying out their favorites.


But seriously, Bankruptcyguy or any of the professors and lawyers...how legal is it to hide or otherwise make unavailable ANY asset in a bankruptcy, once it has been filed?!

The art is neither being hidden nor being made otherwise unavailable. The discussions of the sale are pursuant to Judge Rosen, who is the mediator in the Bankruptcy, looking to solve the problem of what can actually be done with the DIA art [[and short cut the likely decades of lawsuits to follow).
The art was appraised, Rosen thinks that 500 million to purchase the art is reasonable to both protect the "jewel" [[the art is then in a foundation and stays at the DIA...instead of having an auction wherein most of the art goes to Dubai...or where ever) as well as satisfy the creditors.

[rb336]

How much of the DIA art was actually purchased with city funds and not from donor contributions? I think if they can show that the vast majority of holdings were purchased with donated funds, it could be argued that the city doesn't actually own the art but is holding it "in trust" which would take it out of the equation.

[Gannon]

How much of the DIA art was actually purchased with city funds and not from donor contributions? I think if they can show that the vast majority of holdings were purchased with donated funds, it could be argued that the city doesn't actually own the art but is holding it "in trust" which would take it out of the equation.

One would hope.

Bailey, thanks for the that...but I understand the story thus far, and have been continually confused how this jockeying of assets can even be allowed. Let alone even considered.

Say what you will, but this special handling of Detroit's assets seems destined to create lawsuits, not end them. They almost prove the collusion necessary to pull this whole scam off as they did! [[and please, I know the bankruptcy was an eventuality, just not the way it was exercised from the jamming through the EM Manager law to the Bing arrangement bringing in Jones Day to the culling of the two somewhat useful members of council...ad nauseum, there is more but I'm too tired from this flu to go on)


It begs a closer look at Orr's handling of the Chrysler bankruptcy, if I remember correctly him handling that. I wonder with that and GM's renewal how much of this shuttling was done. Surely those divisions spun off were loaded with debt and other ugly lingering complexities.

[bailey]

One would hope.

Bailey, thanks for the that...but I understand the story thus far, and have been continually confused how this jockeying of assets can even be allowed. Let alone even considered.

It's being allowed because this is how it works. Chapter 9 doesn't work like personal or corporate bankruptcies. It's all about reorganizing and a plan of adjustment, not the liquidation of assets. The presence of an asset like the DIA collection is rare...which is why it's newsworthy and what to do about it is controversial.

[Gistok]

Good points all! Rb336... one thing I remember about reading the information cards of many of the DIA artwork is that much of the art is either A) private donation, B) private loan, C) combination of funding sources which may include city funds and D) city funds.

I remember seeing a lot more of A, B and C in the DIA artwork actually on display... but that's not a scientific sample...

[Gannon]

It's being allowed because this is how it works. Chapter 9 doesn't work like personal or corporate bankruptcies. It's all about reorganizing and a plan of adjustment, not the liquidation of assets. The presence of an asset like the DIA collection is rare...which is why it's newsworthy and what to do about it is controversial.

OMG, thanks...I'm a goof. I was totally stuck in a Chapter 11 mindset...but still couldn't figure all the juggling. Geez, now I'll be stuck in learning the differences for the rest of the day.

I'd say off the cuff that these assets are just as unique as the State-constitutionally-guaranteed pension 'promises'...and nobody has done a thing to protect those who need 'em fulfilled to survive. I'm softening the language only to simplify, I know pensions are not merely promises.

Who's zooming who...that's all I'm trying to figure out...because this whole scheme stinks to hell and back.

[Lowell]

What we have here is a hostage situation. Just pay the ransom and your kids will be okay. The DIA just needs a hostage negotiator to figure out the price.

[bailey]

What we have here is a hostage situation. Just pay the ransom and your kids will be okay. The DIA just needs a hostage negotiator to figure out the price.

if that is the way you want to look at it, you need to talk to all those sainted pensioners that are helping hold the hostage. They are part of the chorus of creditors demanding the sale so they don't have to take any hit.

The American Federation of State, County and Municipal Employees [[AFSCME) has joined a legal action to demand that Detroit Emergency Manager Kevyn Orr sell the cultural treasures of the Detroit Institute of Arts [[DIA) to pay off the city’s creditors.AFSCME Council 25 filed the motion jointly with several bond insurance companies and banks, including Financial Guarantee Insurance Company, Syncora Capital Assurance, Ambac Assurance, Hypothekenbank Frankfurt AG, and Wilmington Trust Company.
The motion, which seeks the “greatest return on the city’s assets,” was filed Tuesday afternoon with US bankruptcy judge Steven Rhodes.
“Generally,” the motion states, “a municipal debtor’s most valuable ‘asset’ is its ability to raise taxes. Municipalities rarely own tangible, nonessential assets. The City, however, has the Art, a valuable asset [[speculated to be worth billions of dollars) that is not connected with the delivery of any core services the City provides to ensure the health, safety and welfare of its citizens. Accordingly, the ‘best interests of creditors’ dictates the City must demonstrate that its plan maximizes the value of the Art to enhance creditor recoveries.”

Michael Artz, an AFSCME lawyer, told the Detroit New s, “The art is a huge asset and you can’t ignore it… If it’s going to be sold or monetized, our position is any money should go to pensioners.”

[Ray1936]

"Sainted pensioners", bailey? Wow. I arise!

[GPCharles]

Any sale of DIA holdings would require bankruptcy court approval.
Such as sale would not be considered "in the ordinary course of business."

[jt1]

"Sainted pensioners", bailey? Wow. I arise!

Perhaps martyred instead of sainted as pensioners are the only ones that don't believe they should share any of the pain.

[DetroitArtSeen]

There are many numbers being thrown around regarding the value of the assets in DIA, like the above pensioner article claiming "billions". My thoughts would be the full collection may be quite valuable - but the 400-800 Million number would be actually City owned assets ie; Gistok Option [[D). The remaining would never be optioned for sale.

[Lowell]

Here's a barstool solution I overheard. Pensioners who live/move into in the city get a raise. All others take a haircut.

Then there's the one where there are 66,000 works of art in the DIA. One could be given to each pensioner and there would still be 30,000+ left for display.

[Patrick]

Perhaps martyred instead of sainted as pensioners are the only ones that don't believe they should share any of the pain.

You really do hate city workers/pensioners and their unions eh?

[Gannon]

You really do hate city workers/pensioners and their unions eh?

Apparently at least the ones he can insult publicly!

[jt1]

You really do hate city workers/pensioners and their unions eh?

Nope, I hate their unwillingness to sacrifice anything. It is clear that, in their opinion, it is fine that the residents suffer as long as they don't lose a penny.

I hate the fact that unions like AFSCME refused to allow the greening of Detroit to maintain a facility to grow trees on the belief that, perhaps one day there may be enough in the budget for maintenance to be staffed by AFSCME.

The unions have made their contempt of the residents clear so it shouldn't be a surprise when some of us aren't kissing their behinds.

@Gannon - I will willingly point out when they are an impediment to residents receiving decent services. Hell, if the unions actually delivered decent services you may move back.

[cjd]

In a Chapter 9, unlike some other chapters of bankruptcy, the estate can sell assets without court approval [[indeed, in CH9 a creditor cannot move the court and the court cannot, sua sponte, force the sale of an asset of the estate). Under a different chapter, assets can be [[and frequently are) sold with the court's approval. The key is that you get cash for the asset that will then go to the plan [[to pay creditors).

Here, if the DIA is considered security for a certain group of creditors, the $$ obtained from the buy-out would be paid out to those creditors in any plan of adjustment. I don't see any creditors barking if the city were to monetize the DIA asset and pay that over in the plan to the secured creditors. If the money was targeted for some other creditors, other than the ones secured through the DIA, you can be sure there would be some howling in front of Judge Rhodes to reject the plan.

[Gannon]

So, once again I ask...is it legal? Seems some other folk want to know, too.

http://motorcitymuckraker.com/blog/2...l-expert-says/

[BankruptcyGuy]

But seriously, Bankruptcyguy or any of the professors and lawyers...how legal is it to hide or otherwise make unavailable ANY asset in a bankruptcy, once it has been filed?!

The assets are there, but a federal court lacks the authority to order a state or subdivision thereof to liquidate assets. The court could no more direct the City to sell art than it could direct them to sell parks or anything else.