Skip to main content

Rare Window Onto Artwork Valuation Issues In Insolvency

In the city of Detroit’s Chapter 9 bankruptcy case, the future of the Detroit Institute of Arts has been a key point of contention between the city and several of its bondholders for many months. Almost unique among American art museums, the DIA’s collection is owned directly by the city, and the preliminary question has been whether the DIA’s collection can be sold or otherwise monetized to pay down the city’s debts.

On this point, there is, as yet, no agreement, and the question has not yet been placed directly before the bankruptcy court. There are three distinct positions — (1) Michigan’s attorney general has stated that the entire DIA collection is held in a public trust and cannot be used to pay the city’s debts; (2) the city has stated that only those artworks that were purchased with the city’s own funds ("COD works") may be monetized to pay the city’s debts, which position is embodied in the proposal that has come to be called the “Grand Bargain” and is incorporated into the city’s plan of adjustment (“plan”); and (3) certain of the city’s creditors have stated that the entire DIA collection must be considered available to be monetized.

Read more via the View Media link.