Nation's automakers pitch in $26 million to Detroit's bankruptcy reorganization
It seems momentum behind Detroit's municipal bankruptcy reorganization continues to build. If the momentum continues, the city could emerge from bankruptcy this fall.
Today, General Motors, Ford, and Chrysler pledged to contribute a combined $26 million to a deal aimed at reducing cuts to Detroit pensioners while preserving the art collection at the Detroit Institute of Arts (part of the collection has been talked about as a city asset that could be sold to satisfy Detroit's creditors).
The money from the automakers will go into large pot of money – more than $800 million – collectively known as the "grand bargain."
So far, money for the grand bargain is coming from private philanthropists, foundations, the state of Michigan, and money raised by the DIA itself. The automakers' money will be counted toward the DIA's goal of $100 million.
If the grand bargain deal is executed, it will sever the city's ownership of the DIA. The non-profit group that manages the DIA would take over ownership.
Christine Ferretti of the Detroit News has more on how close the DIA is to raising its part of the grand bargain:
( DIA board chairman Gene) Gargaro added the DIA has already secured $70 million of its $100 million commitment.
Beyond the automakers, DIA officials plan to disclose the additional donors in the coming weeks, he said. “Those are individuals, other foundations and corporations that have yet to say to us ‘please share this good news publicly,’” Gargaro said. “We are not authorized by those donors yet to do that.” The museum, he said, has “a ways to go” to meet its remaining goal, but it’s already coming together.
Here's what the automakers said about their contributions. From the DIA's press release:
“While it is our duty to focus on the revival of this city, it is equally crucial to cherish the treasures the city already offers – not just for ourselves, but for the generations that will follow,” said Sergio Marchionne, chairman and CEO, Chrysler Group LLC. “The Detroit Institute of Arts is a cultural treasure that enriches the human spirit, while offering us a chance to contemplate what humanity has achieved and what we aspire to create in the future.” “Ford has long been committed to the DIA and the vital role it plays in making our city and region unique,” said Joe Hinrichs, executive vice president and president, The Americas, Ford Motor Company. “As Detroit rebuilds for the future, we are proud to continue our support of the DIA and its part in the city’s recovery efforts.” “Preserving the integrity of Detroit and one of its most beloved and historic pillars is of the utmost importance to GM and the GM Foundation,” said Mark Reuss, General Motors Executive Vice President, Global Product Development, Purchasing and Supply Chain and GM Foundation Vice Chairman. “We are longtime supporters of the DIA and pledge our help to keep it an integral part of our community.”
Even though there is tremendous momentum to secure the grand bargain, there are challenges ahead.
As the New York Times reports, some creditors have objected to the deal,
... saying it favors retirees over banks and that they could get more by selling the art outright.
And bankruptcy negotiators are also waiting on the opinion of around 32,000 Detroit pensioners and city workers.
They're in the process of voting on the grand bargain now and, as Michigan Radio's Jack Lessenberry pointed out this morning, we won't know the results of that vote until July 11 or later.
And one final roadblock is the bankruptcy judge himself. Judge Steven Rhodes would have to approve the deal later this summer.
Many moving parts ... and so far, momentum seems to be moving toward a deal getting done.