Detroit Creditors Eye Entire Museum Collection

As Detroit files for bankruptcy — the largest American city ever to do so — the impressive collection of the Detroit Institute of Arts has become a political bargaining chip in a fight that could drag on for years between the city and its army of creditors, who have said in no uncertain terms that the artworks must be considered a salable asset.

Art collectors of Art Kabinett social media network are concerned that the DIA's multi-billion dollar collection may soon be liquidated to satisfy Detroit's mountain of debt.

“We haven’t proposed selling any asset,” said Bill Nowling, a spokesman for Kevyn D. Orr, the state-appointed emergency manager appointed to deal with municipal obligations, which could amount to more than $18 billion. “But we haven’t taken any asset off the table. All of our creditors have asked about the worth of the D.I.A. And we’ve told them that they’re welcome to find out.”

Unlike most art museums around the country, which are owned by nonprofit corporations that hold a collection in trust for citizens, the institute is owned by Detroit, as is much of its collection — which includes gems by artists like Bruegel, Caravaggio, Rembrandt, and van Gogh. It is considered among the top 10 museums in the country.

Museums do not generally appraise the market value of their works beyond a blanket amount for insurance policies. But experts have speculated that the institute’s works could bring more than $2 billion if sold.

About a month ago, the institute’s officials were contacted by Christie’s auction house, which asked for an inventory of works and asked if appraisers could visit to assess the collection. It is unclear whether such a visit took place and whether it was creditors or someone else who enlisted Christie’s to begin an appraisal. (Mr. Nowling said that the emergency manager’s office did not do so, and Christie’s declined to comment.)

But as Detroit’s financial fate comes before a federal bankruptcy judge, it is clear that the desire of creditors to determine the collection’s worth will not go away.

The museum has hired a well-known bankruptcy lawyer, Richard Levin, to advise it on its possible exposure. On its Facebook page, the museum said: “As a municipal bankruptcy of this size is unprecedented, the D.I.A. will continue to carefully monitor the situation, fully confident that the emergency manager, the governor and the courts will act in the best interest of the City, the public and the museum.”

Last month, after the first rumblings that creditors were pressing the issue of the collection as an asset, Bill Schuette, Michigan’s attorney general, issued a forcefully worded opinion saying that the artworks — under the state’s trust law and other laws — were “held in trust for the public” and could be sold only for the purpose of acquiring additional art, not for satisfying municipal debts. He added that in decades of financial turmoil in Detroit, “at no time have the people demanded their most precious cultural resources be sold in order to satisfy financial obligations.”

Under federal bankruptcy proceedings, however, it is unclear what force that opinion would have. Even the question of what would happen if the city decided to sell the art is difficult to answer — whether, for example, the museum would appeal to the bankruptcy judge or would be able to go to another court to try to prevent it.

Museum officials say the sale of even a part of an institution’s core collection in effect renders a museum defunct: donors stop giving money and art, attendance declines and other support dries up.

(The Detroit Institute of Arts’ annual attendance is nearly 600,000. Last year three Michigan counties agreed to institute a property tax increase earmarked for the museum, putting it on a secure financial footing for the first time in decades.)

Politically, and perhaps as a negotiating tactic, the question of the collection’s fate is being cast as a choice between measurable benefits, like city pensions, which could be cut to satisfy creditors, and the much harder-to-measure benefits of cultural assets.

Bankruptcy lawyers say the issue of the value of such cultural assets goes beyond philosophical or moral arguments.

For a bankruptcy judge, the questions could include whether the sale of a city’s artworks would have long-term economic implications — depressing tourism, harming real-estate values and the value of other cultural institutions, for example — in a way that sets a city up for financial failure again down the road.

Samuel Sachs II, who was the director of the museum from 1985 to 1997, said last Friday, “If they do attack this, it will be the end of one of the most venerable cultural institutions in the country, not just in Detroit.”