Detroit automakers commit $26 million to aid bankrupt city’s retirees

Detroits three automakers said on Monday that they committed $26 million toward $100 million pledged by the city’s art museum to save its collection from being tapped to raise cash for Detroit’s bankruptcy.

Under a “grand bargain,” the Detroit Institute of Arts (DIA) would contribute $100 million to ease pension cuts on the city’s retirees and avoid a sale of art works to pay city creditors. Philanthropic foundations have pledged about $366 million and the state of Michigan would make a lump sum payment of $195 million.

The $26 million from the automakers consists of $10 million from the Ford Motor Company Fund, $5 million from General Motors, $5 million from General Motors Foundation and $6 million from Chrysler Group.

As part of the grand bargain, ownership of the DIA’s collection and assets would be transferred from the city to the private nonprofit corporation that currently operates the museum. The Detroit City Council unanimously voted to support the transfer on Thursday.

Detroit’s workers and retirees must still vote on the city’s plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history.

Shirley Lightsey, president of the Detroit Retired City Employees Association:

“You cannot eat principle.”

City unions and the Michigan attorney general have contended that the state constitution prohibits the impairment of pension benefits for public sector workers. But city and state officials have warned that if members of Detroit’s general and police and fire retirement systems reject the plan, the money from the grand bargain would go away and retirees would face bigger pension cuts.

Starting on July 24, U.S Bankruptcy Judge Steven Rodgers will conduct a confirmation hearing on the plan to determine if it is fair and feasible.

Source: Reuters

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