The Wall Street Journal’s Emily Glazer summarizes the creditors call for an independent valuation of the city’s art. It’s important to remember than in a Chapter 9 bankruptcy, the city cannot be forced to sell assets without a judge’s approval:
The creditors said they have not seen any valuation by the city of its art collection after waiting for months, said the person. The art, including works by Vincent van Gogh and Diego Rivera, has been speculated as worth more than $1 billion, according to the filing. The value of the art, if sold, could become key to boosting creditors’ recoveries in the largest municipal bankruptcy in U.S. history.
The creditors requested that the art be assessed based on arms-length market transactions, which the court and creditors could match against estimates provided by the city of Detroit, according to the person. The creditors also said the city could avoid litigation if the creditors have a say in the art’s valuation, the person said.
The Detroit Free Press gives some more details:
In the filing, the creditors argued that Orr is not moving aggressively enough to monetize the art. They warned that the New York-based auction house Christie’s — which the city hired to assess the art’s value — may deliver an “inappropriately low assessment, substantially below the market value of the Art.”
Bond insurers FGIC, Syncora and Ambac Assurance; Michigan Council 25 of AFSCME, the city’s largest union; three European banks that own the lion’s share of the city’s pension obligation certificate debt; and several other creditors jointly filed the motion.
“To date, other than retaining Christie’s, the Emergency Manager has failed to provide creditors with any information regarding any further steps the City has taken or intends to take to explore options and strategies to monetize the art in a manner that maximizes value,” the creditors said in the filing.
The creditors called for Rhodes to appoint a committee of creditor representatives to hire a new outside authority to value the art, allowing the city and creditors to “explore a wide range of options to monetize the art, including options that preserve the DIA as a culturally relevant institution as well as enhance creditor recoveries, in order to reach a consensus about the treatment of the art under the plan.”
Detroit bankruptcy creditors ask judge to take steps toward sale of DIA treasures (Detroit Free Press)