Chelsea Museum End Near
Building Sale Approved; New Home for Art Collection Must be Found in a Year
By CRAIG KARMIN And ERICA ORDEN
A long-running saga surrounding the Chelsea Art Museum moved toward its conclusion after a bankruptcy court paved the way for a $19.35 million sale of the museum's building to a New York developer.
The sale would allow the museum to continue operating at its West 22nd street site, rent-free, until the end of 2011, according to terms of the agreement with Albanese Development Corp.
After that date, the museum would likely have to find a new home to continue operating. The U.S. Bankruptcy Court in the Southern District of New York approved the sale on Friday.
The agreement would also reduce the amount of debt owed by the building owner, a company controlled by the museum's director and founder Dorothea Keeser. The lender, New York fund manager Hudson Realty Capital, has agreed to settle the debt for $13 million, down from its previous claims for about $14 million, according to court documents.
Ms. Keeser responded to an email inquiry about the situation by saying she would not open another museum in New York.
"It's always been our objective to be paid what we are owed, and this accomplishes that goal," says Renee Lewis, a Hudson Realty managing director.
Christopher Albanese, a principal for the purchaser, said he expects to close on the property in approximately two weeks.
A sale likely marks the end years of drama over the fate of the eight-year old museum. The museum's permanent collection features paintings and prints by abstract artists such as Jean Arp, Sam Francis and Joan Mitchell.
Mr. Albanese said his firm intends to lease the building to one or several art galleries once the museum vacates at the end of next year. "It's a prime location and it's a beautiful building and that area continues to get better and better," he said. "We saw it as a good opportunity."
The fate of the museum's permanent collection, worth about $2.5 million, according to Ms. Keeser, remains unclear.
In August, Ms. Keeser said she had pledged the entire collection as collateral for a separate, $350,000 loan to make an interest payment on the mortgage. That move could violate regulations of the state Department of Education's Board of Regents, which supervises and grants charters to museums.
A spokesman for the department didn't respond to a request for information on its review of the matter.
Hudson Realty refinanced the mortgage for the building in 2008 with an $11 million loan. The terms called for Ms. Keeser's company to pay a portion of the interest until January 2009, when the principal and balance were due.
That deadline came and went without payment. In April 2009, Hudson Realty agreed to extend the loan for 18 months, making payment of the principal due in July 2010. That deadline was also missed and in August, Ms. Keeser's company filed for Chapter 11 bankruptcy protection.
Write to Craig Karmin at craig.karmin@wsj.com and Erica Orden at erica.orden@wsj.com
This article is from: http://online.wsj.com/article/SB10001424052748704243904575631012994652750.html
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