If the collection needs to be valued in order for the city to determine a course of action in the event of a bankruptcy and creditor claims, appraisers should be aware of assignment opportunities.
Most of the concern seems to be premature, but the DIA needs to be prepared and the DIA board is meeting in early June to be proactive and take protective measures. The city owns the DIA building and the 66,000 artworks within the collection.
The Detroit News reports
Source: Detroit NewsDIA spokeswoman Pamela Marcil said earlier Friday the city is not allowed to sell off assets because of an agreement with the DIA that says the museum will operate according to professional standards. Selling off art would violate standards set by the American Association of Museum Directors, which has accredited the DIA.
But Orr's spokesman, Bill Nowling, said Friday any such agreement would be invalid under a Chapter 9 bankruptcy filing, leaving the museum's city-owned assets at risk.
Nowling also blasted the DIA for failing to act when restructuring consultants approached the DIA two months ago to warn of "a potential huge liability for them."
"They've been negligent to date in trying to find a way to protect a tremendous cultural asset, not only of the city, but of Michigan and the world," Nowling said. "Burying your head in the sand is not the right option that they should be looking at."
The DIA's Board of Directors has scheduled a special June 3 meeting to discuss the potential sale of the museum's collection.
Eugene A. Gargaro Jr., chairman of the board of directors, said in response to Nowling's comments that the DIA has been "very proactive and responsive in everything we've done, exercising solid stewardship of our responsibility."
"I'm not into making accusations, here," Gargaro said. "I would like to continue the civility and the way we've been working together. It's not our goal to have any kind of adversarial relationship. We want to partner to help the emergency manager."
Nowling's comments came after the museum earlier Friday argued that under the DIA's operating agreement with Detroit, "the city cannot sell art to generate funds for any purpose other than to enhance the collection" in light of the possibility that the DIA may "face exposure to creditors" if Detroit seeks Chapter 9 bankruptcy protection.
Chapter 9 a game-changer
But in a Chapter 9 filing, the agreement between the city and the DIA would be thrown out, Nowling said.
"It's a contract, like all other contracts," he said. "So what you have left is a city asset sitting on the table."
While federal bank law prohibits any liquidation of assets, creditors can sue Detroit for payments — and they could demand Detroit sell off assets to settle those debts, Nowling said.
Detroit owns the majority of the 66,000 pieces of art and the building, but the DIA is the caretaker.
No comments:
Post a Comment