Detroit’s creditors demand a full reckoning of museum’s art
Two groups have subpoenaed the Detroit Institute of Arts for detailed records of finances, operations and ownership history for every work in its collection
By Julia Halperin. Web only
Published online: 02 April 2014
The Detroit Institute of Arts (DIA) has hit an obstacle in its ongoing quest to safeguard its collection from the city’s creditors amid Detroit’s bankruptcy proceedings. Over the past week, two groups of creditors served the museum with wide-ranging subpoenas for records covering the past hundred years and documenting the ownership history of every work in its 60,000-piece collection.
The bond insurer Syncora handed down the first subpoena on 28 March, demanding an exhaustive swathe of documents including the museum’s financial, tax and insurance records. The creditor also requested internal studies on visitor trends and exhibition performance as well as all documents that address the DIA’s complex relationship with the city of Detroit, a history that stretches back to 1919.
A committee representing retirees hit the DIA and the auction house Christie’s with a second subpoena on 1 April, according to the Detroit News. The city hired Christie’s to appraise the museum’s city-owned collection last year, but some creditors complained at the time that its assessment—$454m to $867m—was too low. Although Christie’s focused only on works that were acquired with city funds, the creditors are now seeking details from the DIA on its entire collection.
The latest subpoena comes one day after the city’s emergency manager Kevyn Orr filed an amended plan to alleviate Detroit’s debt, which includes a penalty for retirees if they do not quickly agree to the settlement’s terms and wave their rights to the DIA’s art collection. The settlement features a grand bargain to protect the art and shore up Detroit’s ailing pension funds. The governor of Michigan, a group of local and national foundations and the DIA itself have pledged a total of $816m to the cause. But the creditors seem to suspect the DIA’s art is worth considerably more.
The legal expert Laura Bartell, a bankruptcy law professor at Wayne State University, told the Detroit Free Press that Syncora’s subpoena was “too broad” and unlikely to be accepted in full by the court. But the bankruptcy attorney Craig Barbarosh told the newspaper that the judge could grant some, if not all, of the creditors’ requests.
The subpoenas could significantly extend the negotiation process and place a heavy burden on the museum’s already limited staff, which will have to leaf through tens of thousands of files to produce the requisite information. In August, the charity law specialist Melinda Agsten of the firm Wiggin and Dana LLP presciently told The Art Newspaper: “The litigation could get quite detailed because it is highly fact specific and the facts for any given object can be different from all the rest. They could find themselves having to work through object by object in terms of what, if any, donor restrictions were imposed.”
Representatives from the DIA and Christie's declined to comment.
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