Tuesday, December 03, 2013

"Many legal specialists and government officials say they expect Detroit will be found eligible for bankruptcy protection." (UPDATED 5X)

Big day in the Detroit bankruptcy proceeding.

UPDATE:  It's on.  More later.

UPDATE 2:  The Detroit Free Press's Mark Stryker on what it could mean for the DIA:

"In announcing the city of Detroit is eligible for bankruptcy, Judge Steven Rhodes created a benchmark for selling city assets, including art, but did not rule on whether he would allow the sale of treasures at the Detroit Institute of Arts.  Rhodes said that when deciding whether to sell any asset, the city 'must take extreme care that the asset is truly unnecessary in carrying out its mission.' Rhodes also said that a one-time infusion of cash from the sale of city assets would not solve Detroit’s insolvency. Rhodes, who mentioned the DIA by name, did not expressly remove the art from possible sale."

More later!

UPDATE 3:  Here's the New York Times story.  The takeaway:  "The judge made it clear that public employee pensions were not protected in a federal Chapter 9 bankruptcy, even though the Michigan Constitution expressly protects them. 'Pension benefits are a contractual right and are not entitled to any heightened protection in a municipal bankruptcy,' he said."

UPDATE 4:  Here is a sword-rattling tatement from the DIA: "The DIA remains hopeful that the Emergency Manager will recognize the City's fiduciary duty to protect the museum art collection for future generations and that he will abide by the Michigan Attorney General's opinion that the City holds the art collection in trust and cannot use it to satisfy City obligations. If the art is placed in jeopardy, the DIA remains committed to take action to preserve this cultural birthright for future."

UPDATE 5:  Finally (for tonight), here is Randy Kennedy in the Times on what the ruling means for the art specifically.  DIA director Graham Beal does his sky-is-falling routine, claiming that the sale of any art (even 8% of the collection) would lead to a "nonprofit controlled liquidation," whatever that is.