Jun 09, 2014
By Michael Kramer
General Motors, Ford and Chrysler are motoring into Detroit’s bankruptcy reorganization.
The automakers are pledging $26 million to help support retiree pensions – while keeping the city’s art treasures off the auction block.
It’s part of the Detroit Institute of Arts’ $100 million commitment to what’s being called the “grand bargain” – to resolve the largest public bankruptcy in U.S. history.
Some creditors are demanding the art be sold to pay off some of Detroit’s billions in debt.
As part of the arrangement, Detroit’s art museum and its assets would be transferred to a private nonprofit organization.
The Michigan Legislature has approved sending $195 million to Detroit’s two retirement systems, and Governor Rick Snyder has said he will sign the bill. And about a dozen foundations also have committed about $360 million.
About 2,800 city-owned artworks have been valued at between $454 million and $867 million.
The city’s debt is $18 billion or more – with $5.7 billion in unfunded retiree health care – and $3.5 billion in unfunded pension liabilities.
The city already has reached a deal – through mediators – to protect the art forever and limit pension cuts for approximately 30,000 retirees and city workers to no more than 4.5 percent – instead of as much as 34 percent.
Retirees have until July 11 to vote on the plan.