Culture Chronicle

Chelsea Art Museum Could Close
The Wall Street Journal - October 18, 2010
By Craig Karmin and Erica Orden

The survival of the Chelsea Art Museum is in doubt amid a battle over control of its home, with a lender and the owner each claiming the right to sell the property.

The lender, New York fund manager Hudson Realty Capital, took over the deed to the West 22nd Street building last week after the owner failed to meet a bankruptcy-court deadline, public property records show.

Lawyers for Dorothea Keeser, the museum's director and founder, whose company purchased the 30,000-square-foot building in the late 1990s, are challenging the lender's ability to take title or sell the property. They argue Hudson cannot do so without first going through foreclosure proceedings, and warned in a letter to Hudson's lawyer against taking "any action that would purport to transfer ownership to any third party."

Ms. Keeser's attorneys also say they have a buyer who has agreed to pay $19.35 million for the property and would allow the museum to continue to operate, rent-free, until the end of 2011, according to documents submitted to the Manhattan bankruptcy court.

The dispute marks a surprising twist in a long-running art-world saga that is determining the fate of the eight-year old museum, which has a permanent collection featuring paintings and prints by abstract artists such as Jean Arp, Sam Francis and Joan Mitchell. Its outcome appears likely to be determined in bankruptcy court.

Ms. Keeser's company filed for Chapter 11 bankruptcy protection in August. Under an agreement between Ms. Keeser and Hudson made in a Manhattan bankruptcy court, her company had until Oct. 7 to secure a buyer for the building or find financing to pay off the loan. Her company owed about $13 million, including interest payments that spiked to 20% after a July default, court documents show. For the full article, click here