Art sale floated in Detroit debt trial

Thursday, September 4, 2014

DETROIT — An attorney for one of Detroit’s creditors told a judge overseeing the city’s bankruptcy Wednesday that Detroit could afford to pay 75 cents on the dollar to settle its debt if it sold some masterpieces at an art museum.

But an attorney for Detroit told federal Judge Steven Rhodes in his opening statement that the debt-restructuring plan focused first on resolving a dire financial situation and does not discriminate against creditors.

Syncora Guarantee says Detroit’s debt-restructuring plan would pay some creditors less than 10 cents on the dollar. Syncora Guarantee attorney Marc Kieselstein was completing his opening statement when Rhodes asked for the percentage of what he believed Detroit could offer the New York-based bond insurer and where the money would come from.

“There’s the art,” Kieselstein said. “You could sell one or two pieces. You can finance some of the pieces to get that number.”

Syncora has said Detroit’s blueprint for emerging from the largest municipal bankruptcy in U.S. history is unfair for financial creditors.

The trial’s second day began with attorney Bruce Bennett telling Rhodes that the plan, put together by state-appointed emergency manager Kevyn Orr and his restructuring team, has to be followed in order for Detroit to be stronger and viable.

Detroit wants to cut $12 billion in unsecured debt to about $5 billion through its plan of adjustment, which must be approved by Rhodes.