Sunday, April 5, 2009

Donor's Legal Troubles Cause Museum to Consider Bankruptcy

Friday's Los Angeles Times reported that director Cecilia Aguilera Glassman of the Children's Museum of Los Angeles has stated that absent an unexpected "angel" donation, the museum would file for liquidation under Chapter 7 of federal bankruptcy laws and cease operations.

Ms. Glassman's announcement followed the revelation that the Securities and Exchange Commission has filed a lawsuit accusing businessman Bruce Friedman of Sherman Oaks, California, of diverting more than $17 million from investors in his company, Diversified Lending Group, and has persuaded a judge to freeze all the company's assets.

According to the Times, Friedman's charity, the Friedman Charitable Foundation, became the museum's  largest donor in 2007 when it pledged$10 million to the organization.  However, according to Glassman, the museum has received "less than half" of the pledge and has not determined whether it can keep the money.

Construction of a 57,000-square-foot building for the museum in the Hansen Dam Recreation Area was completed in 2007.  However, the facility has remained empty because museum officials have not been able to raise the funds needed to purchase exhibits and cover operating costs.  Friedman's pledge, therefore, was welcome news to the organization.  In fact, Glassman asserts that without the $10-million gift, the museum would be about $22 million short of the $58.5 million it needs to open.  Accordingly, on March 27 the museum's board of governors voted to declare bankruptcy.  Museum officials have also been engaged in discussions with a court-appointed receiver managing Friedman's assets to determine whether the museum needs to return the money it has received from the Friedman Charitable Foundation.

According to Glassman, "The only thing that could change the course is if there were one or more angel donors who would step in and see the value of the project.  Otherwise, we'll probably not see a children's museum in Los Angeles."

What can I say?  Another sign of the times...

VEJ

http://lawprofessors.typepad.com/nonprofit/2009/04/donors-legal-troubles-cause-museum-to-consider-bankruptcy-.html

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