General Motors, Ford and Chrysler are stepping into Detroit's bankruptcy picture by pledging $26 million US to help support retiree pensions while keeping the city's art treasures off the auction block, officials announced Monday.
- Detroit art valued at up to $867M as city bankruptcy looms
- Detroit art collection under threat as city looks to sell assets
- Jack White pays Detroit's Masonic Temple's $142K tax bill
- ANALYSYS | Detroit's bankruptcy shows even pensions aren't safe
The money will go to the Detroit Institute of Arts as part of its $100 million (all figures US) commitment to what what's being called a "grand bargain" to resolve the largest public bankruptcy in U.S. history. It's helping keep city-owned pieces in the museum off the auction block as some creditors demand they be sold to pay off some of Detroit's billions of dollars in debt.
Of the $26 million, $10 million will come from Ford Motor Co., $6 million from Chrysler Group LLC, $5 million from General Motors Co. and $5 million from the General Motors Foundation.
"The city needs more and specifically the city needs cash," Reid Bigland, head of U.S. sales for Chrysler, said during the announcement at the museum.
Since leaving bankruptcy protection itself in 2009, GM has posted about $20 billion in earnings and currently has a cash stockpile of $27 billion. Chrysler has earned nearly $4 billion since exiting bankruptcy and had $12.5 billion in cash on hand at the end of the first quarter.
Last week, the Michigan Legislature approved sending $195 million for Detroit's two retirement systems, and Gov. Rick Snyder has said he will sign the bill. A dozen foundations also have committed about $360 million toward state-appointed emergency manager Kevyn Orr's plan of adjustment, which is Detroit's road map through and beyond bankruptcy.
As part of the deal, the city's art museum and its assets would be transferred to a private nonprofit.
Snyder called the corporate and foundation support the "fundamental core" of Detroit's comeback, which he described as going on for a while.
"It's a fragile comeback," he said. "Our work is not done. We need to follow through."
About 2,800 city-owned artworks have been valued at between $454 million US and $867 million.
Orr has said the city's debt is $18 billion or more with $5.7 billion in unfunded retiree health care and $3.5 billion in unfunded pension liabilities.
The city already has reached a deal — brokered by mediators — that would protect the art forever and limit pension cuts for approximately 30,000 retirees and city workers to no more than 4.5 percent instead of as much as 34 percent. If the retirees and employees do not support it, the money from the state, foundations and DIA pledge would be made moot and deeper pension cuts could become inevitable.
Retirees have until July 11 to vote on the city's plan. The trial on the city's case will be held this summer.