The Detroit Institute of Arts collection may be worth as much as $4.6 billion, but a sale of art works would raise less than $2 billion to pay the bankrupt city's creditors, according to a report released on Wednesday.
Michael Plummer, an art expert hired by the institute and the city to evaluate the collection and ways to raise cash from it, concluded that litigation and market conditions would depress prices. Liquidating the most valuable works would eventually force the museum to close, in his opinion.
"Rather than being a source of cash to creditors or a burden on the current city, in fact, the DIA is the single most important cultural asset the city currently owns for rebuilding the vitality of the city," Plummer reported.
Some of Detroit's hold-out creditors have been pushing the city to sell or monetize art works to increase settlement payments in the city's plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history.
"The report makes it abundantly clear that selling art to settle debt will not generate the kind of revenue the city's creditors claim it will," said Bill Nowling, spokesman for Detroit Emergency Manager Kevyn Orr.
A spokesman for one of those creditors, bond insurer Financial Guaranty Insurance Co, declined to comment.
Plummer, principal of Artvest Partners LLC, which was paid $112,500 to produce the report, estimated the collection's value at $2.76 billion on the low end, $3.68 billion in the mid-range and $4.6 billion on the high end.
A sale using the mid-range estimate would fetch as much as $1.8 billion or as little as $1.14 billion.
The collection includes "The Wedding Dance" by 16th century painter Pieter Bruegel the Elder as well as works by Vincent van Gogh and Rembrandt.
Under the so-called grand bargain in Detroit's debt plan, $366 million pledged by the DIA and philanthropic foundations and $195 million from the state of Michigan would be tapped to ease pension cuts for city retirees and prevent the sale of DIA works.
Artvest Partners' report warned that likely lawsuits from Michigan Attorney General Bill Schuette, who has maintained the collection cannot be sold under state law, art donors and others would take years to resolve.
The art expert also said options to monetize the collection, including its use as collateral for a loan, were impractical.
Plummer's report follows an appraisal by auction house Christie's in December that estimated the fair market value of about 5 percent of the DIA's collection at $454 million to $867 million. While the new report was more extensive, Plummer noted that a full assessment or cataloguing of the collection would require at least 18 months.
A federal judge overseeing Detroit's historic bankruptcy has scheduled an Aug. 14 start date for a hearing on the fairness and feasibility of the debt adjustment plan.
Late on Tuesday, bankruptcy court mediators announced an agreement between the city and its hold-out police union "on important core economic terms that will become part of a multi-year collective bargaining agreement." As part of the deal, the union urged its members to vote in favor of Detroit's debt plan just days before Friday's deadline for the return of creditors' ballots.