New proposal questions Detroit rescue plan
August 28 2014
Picture: BG
The attempts to save the Detroit Institute of Arts from the bankrupt city's creditors have so far been impressive: a rescue plan has seen the DIA pledge to raise $100m from donors, including the likes of Toyota, as part of an $810m 'grand bargain' that would see the art placed in a bullet proof trust.
But with just a few days to go before the 'grand bargain' was to be put before a court to determine its legality, those opposed to the deal (reports Mary Williams Walsh in the New York Times) have put forward a rival plan which they say would raise far more money; some $4 billion. Critics of the $810m plan say the DIA's collection (some of which belongs to the city, so is fair game for debtors) has been significantly undervalued, and reckon Art Capital's $8 billion valuation is far closer to the mark. Art Capital will lend the city the $4 billion in return for taking the whole of the DIA's collections as collateral.
The original plan saw the DIA's collection valued by ArtVest partners (on behalf of the city) at between $2.8 billion - $4.6 billion. I presume Christie's were involved (see here and here) in this, as they had been allowed access to the museum. The two figures show how difficult it is to value art. However, ArtVest says that in reality the collections would not actually realise that much, because (according to the NYT):
Such a huge sale would flood the market, driving down prices, and Detroit’s bankruptcy might turn off serious investors, Artvest said.
This is clearly phooey, and the sheer quality of much of the art on offer would guarantee stellar prices. And how many times are we told that the one thing holding the Old Master market back is the 'lack of supply'?
Obviously, the 'grand bargain' presents a much safer future to the DIA than Art Capital's somewhat risky and open ended plan. So we must hope that Plan A succeeds yet.
