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Detroit mediator asks foundations to support pensions, art: report

Protesters demonstrate against cuts in Detroit city workers' pensions and healthcare, outside Theodore Levin U.S. Courthouse during Detroit'
Protesters demonstrate against cuts in Detroit city workers' pensions and healthcare, outside Theodore Levin U.S. Courthouse during Detroit'

DETROIT (Reuters) - The federal judge overseeing mediation in the Detroit bankruptcy case has proposed that nine nonprofit foundations create a fund to prop up the city's threatened pension funds and defend the city-owned art in the Detroit Institute of Arts, the Detroit News reported on Thursday.

Gerald Rosen, the chief district judge for the Eastern District of Michigan, floated the concept in a November 5 mediation session, the News said. The fund could total up to $500 million, and Rosen made the proposal to the Kresge, Hudson-Webber, Mott, Knight and Ford Foundations among others, the News reported.

Some creditors have pushed Detroit to sell its assets, including the works of the DIA, to raise funds. Auction house Christie's is in the process of valuing a fraction of the museum's 66,000 piece collection, which includes works by Vincent van Gogh, Henri Matisse and Rembrandt.

Bill Nowling, a spokesman for Detroit Emergency Manager Kevyn Orr, did not immediately respond to a request for comment.

Detroit and its creditors, including the unions, pension funds and retirees who have objected to the city's bankruptcy filing, began confidential mediation sessions in September.

U.S. Bankruptcy Judge Steven Rhodes is expected soon to issue a ruling on whether Detroit, which has $18.5 billion in debt and liabilities, is eligible for bankruptcy. A nine-day eligibility trial ended last week.

The city says its pension liabilities total $3.5 billion, and Orr has said that reducing pension benefits is necessary to get Detroit's debt under control. But the unions, pension funds and retirees have argued that Michigan's constitution protects pensions from being cut.

Orr has not ruled out selling or finding other ways to monetize the art collection. But the DIA, Michigan Attorney General Bill Schuette and others have contended that the city cannot sell the art.

(Reporting by Joseph Lichterman; Editing by Mohammad Zargham)

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