DETROIT — Bankruptcy Judge Steven Rhodes ruled Thursday that he won’t allow some of Detroit’s largest creditors to remove art from the walls at the Detroit Institute of Arts in order to inspect and appraise the art as part of the city’s bankruptcy.
The creditors had argued that doing so would let their outside experts help determine the artworks’ value.
Rhodes also denied the creditors’ motion seeking access to up to a million additional pages of historic documents about the art housed at the city-owned museum. However, Rhodes said he would allow creditors to work with DIA officials to allow access to artwork in storage at the museum.
During the hearing, Rhodes pressed attorneys for creditors why their experts needed to take artwork off the walls of the DIA to learn their value. What couldn’t they learn, Rhodes pressed, just by paying the price of admission?
DIA attorney Arthur O’Reilly told Rhodes that there was real danger to the artwork if it’s removed from the walls by outside experts. He mentioned the famous painting Cotopaxi by Frederic Church that is one of the DIA’s most prominent assets. He said it would take six technicians and special equipment just to get it off the wall where it hangs today.
“All of that movement creates potential for risk. … The very best way to keep art safe is to leave it in place,” O’Reilly argued.
The rulings are a setback for major bond insurers Syncora and Financial Guaranty Insurance Co. — who could collectively lose more than $ 1 billion in Detroit’s bankruptcy. Creditors’ attorneys are pushing for a sale of art and had asked Rhodes to compel Detroit emergency manager Kevyn Orr to consider outside bids for DIA art worth up to $ 2 billion from four clients aligned with creditors.
“It doesn’t appear it is necessary to remove art from walls,” Rhodes said in his ruling from the bench, noting that it would pose a “substantial risk” to the safety of the art. He said such an inspection wasn’t needed in order for creditors to object to the city’s restructuring plan.
At the core of creditors’ requests Thursday is their contention that Orr’s restructuring plan greatly undervalues the art. The centerpiece of Orr’s plan is the $ 816-million, art-for-pensions “grand bargain” that would funnel money from charitable foundations, the DIA and the state into shoring up pensions while sparing a sell-off of DIA masterpieces.
Alfredo Perez, attorney for creditor Financial Guaranty Insurance Company, said during the hearing that a full evaluation of the DIA artwork was necessary for the court to rule on the fairness of the reorganization’s plan.
“If the art was worth $ 4 billion free and clear that would be important for the court to consider,” Perez told Rhodes. “If it’s $ 5 billion, if it’s worth $ 4 billion, that’s important to know.”
In a statement after the ruling, Financial Guaranty Insurance Co. expressed disappointment with Rhodes’ decision.
“We were hopeful that the City would cooperate fully with the four parties that expressed interest in entering into transactions that would fully monetize the Art,” the statement said. “We maintain that the drastically undervalued DIA Settlement under the ‘Grand Bargain’ places politics over the financial and legal realities of the situation and will almost certainly result in drawn-out litigation that no one wants.”
Read or Share this story: http://usat.ly/1grTUUI