Detroit art sale could fetch up to $866 million, auction house says
When you owe over $18 billion, does selling a few paintings for $800 million make a big difference?
That’s the question from Kevyn Orr, the city of Detroit’s emergency manager, who is looking for ways to satisfy creditors now that the largest municipal bankruptcy in the United States has been given the green light by a federal judge.
On Wednesday, famed auction house Christie’s said it appraised part of the Detroit Institute of Arts’ collection and said the works had a fair market value of $452 million to $866 million. He also suggested five alternatives to the sale, which would allow the city to benefit financially, while keeping the DIA collection intact.
Christie’s, which was retained by the city to appraise city-owned works as part of Detroit’s bankruptcy case, said 11 pieces on display in the museum account for 75% of the total appraised collection value.
Christie’s has appraised just 2,781 pieces, purchased with city funds and representing less than 5% of the institute’s total collection, which includes masterpieces by Bruegel, van Gogh and Cézanne.
The alternatives, outlined in a letter to Orr from Christie’s Americas president Doug Woodham, were: using the art as collateral for a loan, leasing the works to a partner museum, creating a “masterpiece trust », sell the art and lend it permanently. at DIA, or put the works in a traveling exhibition.
On Tuesday, Judge Steven Rhodes ruled that Detroit was eligible for Chapter 9 bankruptcy restructuring.
But the federal judge questioned the willingness of some of the city’s biggest creditors to sell DIA paintings and sculptures. Although he didn’t specifically say the art should be spared, Rhodes said such a sale would not have helped Detroit avoid bankruptcy.
“A one-time injection of cash by selling an asset,” he said, would have only delayed the city’s “inevitable financial failure” unless it could also find a sustainable way to recover. ‘increase income and reduce expenses.’
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Rhodes said that when considering selling assets, a city “must ensure that the asset is truly useless in fulfilling its mission.”
A coalition of creditors filed a petition last week asking the judge to appoint a committee to oversee an independent appraisal of the collection.
Orr told the Detroit Free Press editorial board after Tuesday’s decision that in “preliminary discussions” with Christie’s, it emerged that the market value of some of the collection’s top pieces would be less than $2 billion – a figure widely cited as a low estimate. of the collection’s value – and that the valuation could be less than $1 billion.
“We’ll try to get some value out of the art one way or another,” he told the board, but added that that didn’t mean he was currently planned to sell works of art at auction. ” Let’s be clear. It is an asset of the city,” he told the newspaper.
He has publicly stated that museum officials must “save themselves” by finding a way to contribute money, possibly as much as $500 million, to the city’s debt relief.
The institute itself opposes an art sale.
“The DIA art collection is a cultural resource for Detroit residents,” he said in a statement. “The museum’s collection is the result of more than a century of public and private charitable contributions for the benefit of the public.
“Protected by a charitable and public trust, the collection survived several municipal fiscal crises and financial downturns, including the Great Depression, without threats to its existence,” he said.