Just after the Bankruptcy Court held that Detroit is indeed eligible for Chapter 9 bankruptcy, Emergency Manager Kevyn Orr reiterated that he expects the Detroit Institute of Arts to contribute financially to the city’s plan to emerge from insolvency. Said Orr, “We’d like to find a way to monetize the DIA.”
Adding complexity to an issue where none is needed, Orr also gave an initial report on the appraisal that has been underway by Christie’s. Orr said that what were deemed to be the top 500 city-bought works on permanent display have a total value between $1 and $2 billion. That is considerably less than many prior estimates, but still a staggering sum of money. That was later clarified by Christie's itself, which reported that the 2,781 works appraised had a value of between $452 million and $866 million.
It is difficult to conclude whether the lower-than-expected number bodes well or ill for DIA’s hope to keep its collection out of the bankruptcy discussion. On the one hand, Orr could depict a demand that the museum produce $500 million (a number that has been bandied about) from the collection as a compromise, putting the pressure on DIA and its supporters to come up with that money in exchange for a promise not to sell any of the art. On the other hand, while $2 billion is less than expected, it is huge sum of money and could entice Orr to move forward with a fire sale in an effort to get what would be a meaningful number in the context of the bankruptcy, since a subsidiary amount extracted in some other way would be almost a drop in the bucket compared to Detroit’s debts.
The estimate will almost certainly feed into the creditors’ motion filed last week. They at least now have a number to challenge, and could argue that the estimate underscores their need to participate in the valuation process (absent an objectively defensible alternative figure).