Four Decades for Justice
November 11, 2014
On November 7, 2014, Judge Steven W. Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan approved a plan for the City of Detroit to exit Chapter 9 bankruptcy, embodying the “Grand Bargain” between the City and its creditors.
A central element of the plan is a settlement relating to the city’s largest asset, the 60,000+ item art collection housed at the Detroit Institute of Arts, one of the top six encyclopedic art museums in the country. Cravath was retained by the DIA to advise and represent it in the bankruptcy. Over the course of the case, Cravath helped the DIA develop a strategy and the legal arguments necessary to protect the collection from creditors, obtain valuations of the collection, develop expert testimony showing why liquidation of the collection (valued somewhere between $2 billion and $8 billion) would have yielded only a fraction of its aggregate appraised value, negotiate relevant portions of the plan and represent the DIA at the trial in September and October in Detroit on plan confirmation.
Under the now approved plan, the DIA’s collection, notable for its impressionist and Asian art holdings, will remain intact, and ownership of the art will pass from the City to the DIA to hold in trust in perpetuity for the people of Detroit and Michigan. As part of the Grand Bargain, Detroit’s underfunded pension fund will receive a total of $816 million over the next 20 years from foundations, corporate donors, the DIA and the State of Michigan.
The Cravath team included partners Antony L. Ryan and David Greenwald and associates Mitchell J. Riley and Alexander S. del Nido on litigation matters.
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