WASHINGTON, Aug 6 (Reuters) - Toyota Motor Corp is pledging $1 million toward an agreement intended to help the city of Detroit exit bankruptcy without having to sell off its art collection, the Japanese auto company announced on Wednesday.
The “grand bargain” is the lynchpin to Detroit’s plan to adjust $18 billion of debt and exit bankruptcy. Under the agreement, the Detroit Institute of Arts and other groups will contribute $466 million over 20 years and the state of Michigan $195 million to ease pension cuts.
City creditors opposed to the plan say Detroit should sell or monetize an art collection worth billions of dollars to increase settlement payments.
The art institute has been raising funds for its $100 million part of the bargain, and currently has more than $80 million in pledged donations. Detroit’s big three automakers have promised to contribute $26 million.
Detroit, also known as the Motor City, is the historic hub of automobile manufacturing in the United States.
“Detroit and the surrounding areas are vitally important to the automotive community. They deserve our support,” Simon Nagata, president of Toyota Motor Engineering and Manufacturing, Inc., said in a statement.
No one is sure of the art collection’s value, and the estimates of its worth span a wide range. Hold-out creditor Financial Guaranty Insurance Company says the collection is worth at least $8.55 billion, while the city and institute put the value at closer to $4.6 billion.
If U.S. Bankruptcy Judge Steven Rhodes determines the bankruptcy plan is fair and feasible, then it could be approved over creditor objections. On Wednesday, Rhodes held a preliminary hearing to prepare for the plan’s confirmation hearing set to begin Aug. 21. (Reporting By Lisa Lambert)