What happens to a collection when a museum closes?

Have you ever wondered what happens to the artworks that are part of a museum collection when the space is forced to close doors? Fortunately this is an unusual situation, but how can an instituion deal with the need to discard the artworks that compose its assets? Many believe that, in the event of a permanent closure of a museum, its objects are welcomed by other cultural institutions, but that is not exactly how things are processed most of the times.

The 12 months before the closure of The Museum of Biblical Art (MOBIA), in New York, were a “blind operation” to the director Richard P. Townsend. We were in 2015 and Townsend discovered that there were not any guidelines that helped a museum knowing how to act. More peculiar than that, when Richard P. Townsend asked The American Alliance of Museums for help,  he received exactly the same answer: officially, there’s no “closure plan” to these institutions.

Who determines what happens when a museum closes?

Although public opinion may play a role on the course of events, the truth is that the determinations belong exclusively to three parts: the board of trustees, the creditors, and the state’s attorney general. The board of trustees is in charge of maximizing assets after settling the debt, the creditors just want to be paid in full, and the attorney general  need to ensure that any additional assets (after paying the debt) are used in the best public interest.

Obviously this scenario collide with a basic question … The institutions may not hold sufficient assets to output its debts. What happens then when the value of the assets (including, yes, the museum collections) is lower than the debt?


Value of assets is lower than the museum debt

When the debt of a museum ascends the value of its assets, the institution has no choice but to sell the assets (which, unfortunately, includes its private collection). It is expected that the board of directors ensure that the sale is conducted in the most advantageous way possible (we have no doubt that creditors will make sure that this happens).

The practical case of the Fresno Metropolitan Museum

The Fresno Metropolitan Museum, forced to shut down in 2010, had a collection of over 3000 artworks and artifacts. Evaluated the need for closure, it became apparent that the institution didn’t have sufficient assets to pay all creditors, forcing it to seek for alternatives. Instead of starting a bankruptcy process, the board took an “Assignment for Benefit of Creditors” that transmitted to an administrator (from outside the institution) the responsibility to liquidate the assets and pay creditors the debt value.  Most of the museum’s pieces were auctioned and sold to private collectors, leaving therefore the public domain.

Value of assets covers debt

Obviously, if the museum is in this “relatively more comfortable” position, the flexibility that will streamline the distribution of its belongings is completely different. In those situations, the museum can control which assets will be sold first and how the negotiations will occur, thus ensuring a more interesting fate for the collectibles.


What if there are assets left?

This decision is mainly stakeholders’ responsibility but, theoretically, the more appropriate way to use the assets is on a similar mission to the one provided by the (now) closed museum. For example, if the institution was a regional museum, the objects can be donated to a space that occupies the same purpose. In some cases, the institution may lead to another museum or nonprofit organization with the remaining assets.