San Francisco Art Institute declares bankruptcy, paving the way to liquidate millions in assets

The San Francisco Art Institute has filed for Chapter 7 bankruptcy protection, a move that will force the 152-year-old institution to liquidate its assets and abandon its legendary campus on the edge of Russian Hill. 

The Art Institute filed for bankruptcy on April 19, according to documents reviewed by The Chronicle.  

“It was a good run for 152 years and it is such a tragedy that it is gone,” said John Marx who served as co-chair of the institute’s board. “The passion was there until the very end and up to the moment that we filed we were still trying to get a couple of billionaires on the East Coast to help us out but it just didn’t work out.” 

Added his co-chair Lonnie Graham, “after every single possible effort we just weren’t able to get the support that was necessary to keep it going. It is tragic.”

Chapter 7 bankruptcy requires liquidation of assets in order to repay creditors. A meeting of the creditors will be held May 17. Most prominent among them is the University of San Francisco, which claims  it is owed around $6 million for costs incurred in exploring a relationship between the two institutions in an attempt to save the art school. But USF ultimately decided not to go through with it in July 2022, and the Art Institute announced it would cease operations, ending a San Francisco tradition that dates back to 1871. 

“The Making of a Fresco Showing the Building of a City” painted by Diego Rivera in 1931 sits in a private gallery at San Francisco Art Institute in San Francisco, Calif. 

“The Making of a Fresco Showing the Building of a City” painted by Diego Rivera in 1931 sits in a private gallery at San Francisco Art Institute in San Francisco, Calif. 

Jessica Christian/The Chronicle

The other main creditors are the Art Institute’s landlords, who claim they’re owed unpaid rent. The Regents of the University of California own the building and the land at the main campus, 800 Chestnut Street, under a complicated arrangement of a will that donated the property. It claims $450,000 in unpaid rent. 

 Fort Mason Center for Arts and Culture owns the pier under the graduate school, a $14 million campus that opened in 2017 in a spectacularly ill-timed expansion in the face of dramatically declining enrollment and an increasing debt load.

 The Fort Mason campus closed in March 2020, with the Art Institute abandoning a 55-year master lease. It was finally evicted for nonpayment of rent last year. The space remains vacant. The Fort Mason claims it is owed in excess of $750,000.

 “SFAI’s closure and pending bankruptcy is a loss for every San Franciscan who values the city’s creative spirit,” said Mike Buhler, President and CEO of Fort Mason Center for Arts and Culture. 

AT&T is owed $30,000, PG&E is owed $6,900 and the annotated list goes on for 49 pages, all the way to Bay Alarm, which is owed $1,305 and Dewey Pest Control which is owed $816. Also among the creditors are every faculty member who has lost his or her job in the upheaval and is owed severance. 

Total liabilities listed on the bankruptcy filing total little more than $10 million. 

Among assets the Art Institute lists $9.35 in an account at Silicon Valley Bank, and $125,000 in the value of an untitled painting by noted Mission School artist Alicia McCarthy. There is also $50,000 in office equipment and art-making machinery. 

But the main asset is “The Making of a Fresco Showing the Building of a City,” a mural painted on commission by Diego Rivera in 1931. It hangs in its own namesake gallery on the main campus. That is valued in the bankruptcy declaration at $50 million, though the statement notes that it has not been appraised within the last year. 

The total value of assets is just under $65 million, according to the Art Institute.   

When it became known that the Art Institute was possibly shopping the Diego Rivera mural around, it was declared a city landmark and cannot be moved without permission of the San Francisco Board of Supervisors. Had it been allowed to sell the Rivera mural for $50 million, as was rumored, it would have saved the Art Institute, Marx told The Chronicle.

“It is the last chapter of a long running civic education arts tragedy,” said Supervisor Aaron Peskin who sponsored the legislation to landmark the mural. “The legacy lives everywhere. All around this city and this country is the art that this institution produced and fostered, from Annie Liebovitz to North Beach’s own Dennis Hearne. But at this point it is over.”

The Rivera fresco will remain and Peskin is already looking into ways to put it onto public gallery.   

This year the Art Institute established a Legacy Foundation and in March the 152nd anniversary of the school was honored. The foundation rented space at Crown Point Press for the SFAI archives and it is not known if those materials will be affected by the bankruptcy filing. 

Through a spokesperson, administrators at the University of San Francisco confirmed it was a secured creditor but declined to comment further. The UC Office of the President also did not respond to a request for comment. 

The Art Institute closed its main campus in 2022 after many years of failed board reorganizations, capital campaigns and fundraisers that were mounted to stave off ruin at the once proud art school where Ansel Adams, Richard Diebenkorn and Wayne Thiebaud taught. The student body, which had been as high as 700, was down to 41 students at the time of its closure.  

“The reality is that schools this size that are tuition based are a vanishing species,” said Gordon Knox, a former president of the institute. “And there is no changing evolution.”     

Reach Sam Whiting: [email protected]

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