June 17 Michigan Attorney General Bill Schuette
on Tuesday approved a deal to protect the Detroit Institute of
Arts' (DIA) collection from being tapped to help pay the
bankrupt city's creditors.
Under the settlement, which is part of the so-called grand
bargain in Detroit's debt adjustment plan, the DIA's assets will
be transferred to a nonprofit corporation for the benefit of
Detroit and state residents.
Schuette said the arrangement complies with an opinion he
issued a year ago that concluded the DIA's art collection is
held in a charitable trust for the people of Michigan and no
part of the collection can be "sold, conveyed, or transferred to
satisfy city debts or obligations."
The attorney general said his approval was required under
the settlement. The Detroit City Council has also approved the
transfer of city assets at the DIA to the nonprofit corporation.
"As required by Michigan law, the DIA Settlement continues
the museum's charitable purpose and thereby preserves Michigan's
world-class art collection for current and future generations of
Michigan citizens," Schuette said in a letter to U.S. Judge
Steven Rhodes, who is overseeing Detroit's historic bankruptcy
Bond insurers Syncora Guarantee Inc and
Financial Guaranty Insurance Co, which face big
potential losses in the bankruptcy, have been pushing Detroit to
some of the DIA's art.
The grand bargain involves $366 million pledged by
philanthropic foundations and $100 million by the DIA, along
with $195 million in state funds to ease pension cuts for
Detroit's retired workers and prevent art works from being sold
or monetized to pay city creditors.
The deal is a key element of Detroit's plan to adjust $18
billion of debt and exit what ranks as the biggest municipal
bankruptcy in U.S. history. The city has warned that if its
current and retired workers vote to reject the plan, the grand
bargain would be yanked and pension cuts would be bigger.
Auction house Christie's, which was hired by the city last
year, had estimated that the city's share of the DIA's
collection was worth as much as $867 million.
(Reporting by Karen Pierog; Editing by Leslie Adler)