CHICAGO — Syncora Guarantee Inc. has subpoenaed the Detroit Institute of Arts and the state of Michigan for dozens of documents as part of the bond insurer's challenge of Detroit's bankruptcy and the public-private effort to protect the city's art collection.
Syncora filed the request Friday. The filing announces the insurer's intent to subpoena the DIA, the state, as well as Christie's Inc., the art auction house, which last year completed a valuation of DIA's collection.
The state, the DIA and emergency manager Kevyn Orr are trying to close a public-private deal that would generate up to $850 million for the city's unfunded pensions and protect the DIA's prized — and municipal-owned — art collection. The so-called grand bargain, hashed out by the bankruptcy court mediator, calls for $350 million in private donations, $350 million in state funding, and $100 million from the DIA. The parties will only pledge the money if it goes solely to pay off Detroit's unfunded pension liability, and not go toward bondholders or any other creditors.
Syncora and other creditors argue that the art collection may be worth much more than Christie's estimates, which put it around $850 million at the high end. There's no reason why non-pension creditors should be shut out of that asset, the insurers argue.
Syncora has requested 80 documents, many of which have several subcategories of additional requests, from the three parties that date back to 1883.
From the DIA the insurer is requesting, among other documents: all inventories created in the past five years of the works and objects in the museum's collection; provenance listings for every piece; all communications the city had with investors, collectors or other individuals about the pieces; the museum's attendance numbers; and all documents related to Christi's valuation.
From the state, the insurer is requesting, among other things: documents related to the analysis of the city not filing for bankruptcy; documents related to creditor recoveries outside of Chapter 9; all communications related to the service corporations set up in 2005 to issue $1.5 billion of pension certificates; and all documents relating to the city's revenue-sharing arrangement with the state.
