Polaroid Collection: Update 8

What Did Polaroid Know, and When Did Polaroid Know It? (continued)

In my previous post, I presented evidence indicating that the Polaroid Corporation has always known that it didn’t own outright most of the works in its collection. Let me continue by exploring briefly the implications and ramifications of that possibility in the current situation.

The shell entity now in possession of the Polaroid Collection, legally (and confusingly) known as the Polaroid Corporation, is composed of debtors left holding the bag when Petters International imploded in 2008. They’ve already sold off the Polaroid brand, its IP, and other assets to an entity known as PLR IP Holdings, LLC, which bought everything except the Polaroid Collection from them in April 2009, and will continue to manufacture and sell products under the Polaroid name.

Here’s the April 17, 2009 “Revised Notice of Prevailing Bidder” from the Minnesota Bankruptcy Court, which rubber-stamps that sale and validates the exclusion of the Polaroid Collection from the list of acquired assets. Attached to it is Schedule 1.2(q), which itemizes the 15,934 works officially included in the collection at that point — and which PLR IP Holdings, LLC chose not to acquire, for undisclosed reasons.

William of Ockham

Now, to finalize settling their debts, and to avoid accumulating new ones before dissolving, the Polaroid Corporation seeks to dispose of the Polaroid Collection for cash, claiming that storage and maintenance of the collection costs them upwards of $400K per year. So they desperately want to end their expensive involvement with this unique asset — for which, remarkably, its uniqueness notwithstanding, they assert that they have never received even a single “formal bid.” This seemingly inexplicable absence of interest in the collection from the photo/art market begs for the application of the Occam’s Razor principle: The simplest answer is usually the right one. But simple doesn’t mean simple-minded, or naïve, or ingenuous, or credulous.

Take Marion Maneker’s “Polaroid Wants to Go to Auction,” a piece subtitled “No One Offered Privately on the Polaroid Collection. Why?” and published by Art Market Monitor online on August 13th, 2009, just weeks before before the Minnesota Bankruptcy Court hearing that authorized the sale at auction of the collection. In the article, Maneker phrases his question thus: “Does the photography market lack deep pockets willing to buy a big collection?” This narrows his inquiry strictly to the issue of asking price (which figure the current owners of the collection have never made public). Maneker next takes at face value a statement from the Polaroid Corporation quoted from the Wall Street Journal: “Polaroid said that its own attempts to find buyers for the art had attracted interest from individuals, investors and institutions, but that it had yet to receive any formal bids.” And he concludes from this, “In other words, no one had the money or wanted to take the risk in buying so many photographs.”

Qatar Museum of Photography (maquette)

As I stated in my previous post, that represents neither sound reasoning nor investigative journalism. We know that, the current meltdown notwithstanding, there’s more than enough money afloat in the art world to make acquisition of the plum Polaroid Collection by some truly interested party easily affordable at its estimated auction value of $8-12 million USD, certainly at the necessarily lower asking price for the collection as a whole. (I include in this prognosis potential purchasers from the Middle East, where new major photo collections have begun to emerge and new museums of photography are getting conceived and built, such as the one in Qatar, designed by Santiago Calatrava.)

Museum of Photography, Qatar

The Polaroid Collection is truly and literally unique; not only is it an enormous, synergistic, one-of-a-kind archive of half a century’s creative work with a specific set of photographic tools, materials, and processes by hundreds of artists and photographers, but the vast majority of the 16,000 works it contains are one-of-a-kind pieces. It would form the cornerstone for any emerging museum collection, or serve as centerpiece and major enhancement for an existing repository. Properly managed and promoted, it would make the institution that housed it into what’s now called a destination venue — especially given the surprisingly widespread nostalgia for all things Polaroid (in the product line’s analog forms).

In short, the Polaroid Collection is highly desirable and, even at the high end of Sotheby’s estimate, reasonably priced. Given that a single Steichen print went for close to $3 million just a few years back, and a single Gursky sold for over $3 million shortly thereafter, the notion that no one in what Maneker calls “the photography market” can afford to buy the Polaroid Collection is laughable on its face.

Whitney Museum of American Art, New York

For some reason, Maneker elected not to pose his key question to anyone save himself. He didn’t ask anyone at PLR IP Holdings, LLC why they chose to acquire everything but the Polaroid Collection from remnants of the Petters company. He didn’t ask David Ross, former former director of the Whitney Museum of American Art in New York, why the Whitney didn’t take the collection when it was offered to them as a donation sometime in the 1990s.  He didn’t call any of the major institutions that would seem likely to find acquisition of this archive worth considering. (I’ve heard, from an anonymous source, that both the Getty Museum in Los Angeles and the Museum of Fine Arts in Houston wanted it, but that both deals were scotched by people inside the Polaroid Corporation.)

If (pace Maneker) price is no object, then what is?

This brings me to the logical conclusion that every potential buyer — “individuals, investors and institutions” — has discovered in examining the collection’s documentation that the bulk of it is contractually encumbered in ways that prohibit (or at least problematize) its sale, thus also making perilous its purchase as a whole. (For samples of the Polaroid Collection’s release forms and letters of agreement with photographers and artists, click here.) If that’s true, then all prospects have had good reason to back off and not bid on the collection.

Note: At the urging of George H. Singer of the Minneapolis law firm Lindqvist & Vennum, legal counsel to John R. Stoebner, the court-appointed Chapter 7 Trustee in the PBE Corporation bankruptcy proceeding, I hereby retract the above passage, as indicated by the strikethrough. In its place, I substitute the following, as indicated in italics:

There are numerous possible reasons for any given institution’s decision (past, present, or future) not to acquire this collection.

• The first is budgetary. While there may be big money afloat in the photography market as a whole, that doesn’t mean any specific museum, archive, or other collection could automatically afford either the unspecified asking price for the complete collection or the subsequent costs of accessioning, cataloguing, and conserving it.
  
• The second is “fit” — that is, the rationale for inclusion of any photograph (multiplied by 16,000 images in this case) within a particular repository. Thus an institution that emphasizes the exhibition of masterworks might not find it worthwhile to absorb a collection that includes predominantly works by young and mid-career mid-level artists and photographers, however important that might be as study material. That would make, say, the Library of Congress a more likely recipient than the Metropolitan Museum of Art.
• The third, related to the second, is quality. One museum curator with whom I’ve corresponded indicated that his institution, a well-financed one, turned the collection down in 2008 because they weren’t happy with the ratio of what they considered first-rate work to second-drawer work in the total inventory.
• A fourth is that they’d come across the published comments of David A. Ross, former director of the San Francisco Museum of Modern Art (1998-2001) and, before that, the Whitney Museum of American Art (1991-98), who has stated that “The works are on long-term loan to Polaroid, and were specifically acquired to be lent to museums, or used for similar non-profit educational purposes. I know this as there was a move afoot during the 90’s to donate the ‘collection’ to the Whitney Museum of American Art while I was its director, and I recall that the restrictions of selling the work led the already cash-starved company to consider the gift as it was consistent with the agreements that Polaroid had entered into with the participating artists.” (See his August 27, 2009 comment at the Wall Street Journal website.) Ross thus proposes that at least some substantial portion of the collection is contractually encumbered in ways that prohibit (or at least problematize) its sale. (For samples of the Polaroid Collection’s release forms and letters of agreement with photographers and artists, click here.)

What does “encumbered” mean? From the court-approved motion that enabled the transfer of all Polaroid holdings except the collection to its current owners, here’s the definition: “‘Encumbrance’ means any lien, pledge, charge, security interest, option, right of first refusal, mortgage, easement, right of way, lease, sublease, license, sublicense, adverse claim, title defect, encroachment, other survey defect, or other encumbrance of any kind, including, with respect to real property, any covenant or restriction relating thereto.” Certainly the “non-exclusive” rights to utilize works in the collection, licensed to Polaroid by the photographers represented, and those photographers’ contractual rights “in perpetuity” to borrow their works for exhibition and publication purposes, constitute encumbrances. And encumbrances, in turn, prevent free and clear transfer of ownership; indeed, they undermine any claim to full ownership.

And that in turn might explain why the current incarnation of the Polaroid Corporation, as a last resort, hastened this past spring and summer to have the Minnesota Bankruptcy Court recertify all the collection’s contents as free and unencumbered contractually, and got that same court to approve the piecemeal auctioning off of all that work. If that happens, the dismantling of the collection will become a done deal. Because once that sale takes place it will become impossible to retrieve the dispersed pieces, or enforce any encumbering contracts related to them.

Sotheby’s, which has the Minnesota Bankruptcy Court’s authorization to proceed with the sale, has no obligation to disclose the names of successful bidders (quite the opposite, in fact; its privacy policies prohibit such disclosure). No one will know who owns these works once they’re auctioned off. Pieces will end up scattered everywhere, untraceable. Something akin to the operations of an automotive chop shop, one might say, although — with the welcome endorsement of the Minnesota Bankruptcy Court — all now open and aboveboard.

(To be continued.)

P.S. For anyone tracking the fallout from the larger Tom Petters Ponzi scheme in which the Polaroid Collection became enmeshed, let me also recommend a site apparently called Petters-Fraud.com, run by Laser Haas, which offers (so far as I can tell) the most extensive online documentation of and commentary on the complete Petters scam. There’s a section devoted to the Polaroid bankruptcy, which contains a number of relevant links and documents, but no specific tracking of the narrative thread relating to the collection. This serves as a reminder that our special concern in this situation constitutes a very small piece of a much larger puzzle.

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For an index of links to all posts related to this story, click here.