“The Detroit Institute of Arts embraced publicly, for the first time, the broad outline of a federally mediated deal that would protect its art from sale and spin off the museum from city ownership into an independent nonprofit. The deal would raise roughly $500 million from a consortium of national and local charitable foundations and funnel the money into retiree pensions on behalf of the value of the art at the DIA.”

“The Detroit Institute of Arts has joined behind-the-scenes federally mediated talks to shield the museum from creditors in Detroit’s bankruptcy and bolster at-risk municipal pensions.”

“Some of the city’s most powerful leaders are working furiously to fashion a grand bargain in which nonprofit foundations would put up $500 million to spin off the Detroit Institute of Arts from the city, and that money would be used to reduce pension cuts and help rebuild city services.”

“A figure less than $2 billion is likely to inflame the passions of bondholders, unions and other creditors who see DIA masterpieces as a prime source for recovering the billions they are owed by the city. It also increases the chances that a court battle over the fate of the DIA will become even more contentious as Kevyn Orr prepares his plan of adjustment to restructure city finances.”

“The motion formally takes the fight over the fate of the DIA into court for the first time. The filing suggests major creditors are unlikely to agree to any restructuring plan if they believe Detroit emergency manager Kevyn Orr is offering a low-ball figure for the value of the art. The move increases the chances that Rhodes will be forced to decide whether the art can legally be sold.”