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April 10, 2014

Detroit Creditors Say Billion-Dollar Offers in Hand for Art

With support from major creditors in Detroit's bankruptcy case, a bond insurer has solicited bids to buy some or all of the Detroit Institute of Arts collection, a move aimed at undercutting the "grand bargain" to preserve the museum's holdings with a mix of state and philanthropic funds, the Detroit Free Press and The New York Times write.

Three prospective purchasers—two investment groups and a Beijing-based auction house—are offering $895-million to $1.75-billion for elements of the collection, according to documents presented in bankruptcy court Wednesday by the Financial Guaranty Insurance Company. Another entity proposed a $2-billion loan to the museum with the art as collateral.

Municipal and state leaders are backing an $816-million rescue package that would keep all the art in Detroit and turn over the city-owned museum to a nonprofit. More than half of the funds would come from foundations and the museum itself.

Bond insurers Financial Guaranty and Syncora, city employees' unions, and other creditors have pressed Detroit officials to divest some art to pay off billions of dollars in pension and other liabilities. Ignoring the sale and loan offers would be an "egregious example of the city placing politics over the financial and legal realities of the situation," said Steve Spencer, an adviser to Financial Guaranty.