Encyclopedia Of Detroit

A critical component of Detroit’s plan to exit bankruptcy in December 2014 was coined the “Grand Bargain.” Its goals were to prohibit the sale of artwork from the city-owned Detroit Institute of Arts (DIA) to pay off the city’s massive debt, to preserve city pensions, and to satisfy creditors. Under the terms of the bargain, $816 million was donated by multiple foundations (consolidated into the Foundation for Detroit’s Future), Detroit Institute of Arts donors, and the State of Michigan. The funds were to be dispersed over twenty years to the General Retirement System and the Police and Fire Retirement System to help ameliorate retiree pension cuts necessitated by the bankruptcy. With the bargain in place, Detroit city retirees voted to accept the pension cuts and the DIA was allowed to become an independent institution, owned by a charitable trust, forever protecting its masterpieces from being considered city-owned assets.

Chief federal mediator and U.S. District Chief Judge Gerald Rosen created the original structure of the bargain and arbitrated throughout the sometimes contentious negotiations. State-appointed emergency manager Kevyn Orr, DIA Director Graham Beal, and heads of many philanthropic foundations were key players in keeping the world-renowned masterpieces in the DIA safe for future generations to enjoy.

Following difficult negotiations and significant concessions by city creditors, Detroit’s bankruptcy plan, including the Grand Bargain, was approved by Judge Steven Rhodes, and the city emerged from the largest municipal bankruptcy case in U.S. history on December 10, 2014, just 17 months after filing Chapter 9.