Preparation for museum closure: Assets and Collections

Assets are everything the governing body owns. Examples are money, equipment, heritable property such as land and buildings and the rights attached to them, and items held in the museum collection. 

If the governing body is insolvent, or approaching that situation, an Insolvency Practitioner (IP) will need to be involved. An IP can help with rescue packages if brought in early enough or will take over the liquidation of assets if winding up is necessary. 

If it appears that the museum’s liabilities are greater than its assets, or the cashflow/forecasts suggest that the museum will struggle to meet its debts, then the museum may be insolvent. The best person to speak to in this situation is an Insolvency Practitioner (IP) who will be able to provide advice and options on how best to deal with museum’s financial position.  An IP is licensed and authorised to act in relation to an insolvent individual, partnership, or company. An IP must follow the law and their work is monitored by regulators to make sure that they do. An IP will also be able to advise governing body members and trustees on how it may impact them on a personal level, their obligations, and what action they may need to take. An IP should provide initial advice free of charge and if an IP led process is required then an appropriate fee basis is agreed beforehand. The earlier advice is sought, then the more options will be available, and there is a greater chance that measures can be taken to turnaround or rescue the museum. 

You can contact the following IPs below for no-obligation initial advice: 

• Duncan Raggett – Anderson Anderson & Brown LLP – duncan.raggett@aab.uk  (Aberdeen & central belt) 
• Shona Campbell – MHA Henderson Loggie – campbell@hlca.co.uk (Dundee but have offices across Scotland) 
• Richard Bathgate – Johnston Carmichael – Richard.Bathgate@jcca.co.uk (Across Scotland) 
• Richard Gardiner – Thomson Cooper – rgardiner@thomsoncooper.com (Offices in Fife & Edinburgh and covers all of Scotland) 

Find other Insolvency Practioners via the Gov.uk website. 

If a museum ceases to exist, then its collection must be cared for or dispersed accordingly. Preparation is key to handling this scenario. 

In order to handle the collection in its entirety it’s important to know what the museum has in its care, so clear collections documentation is crucial to the process. Time and resources to undertake a Spectrum compliant inventory are essential if this has not already been done. This procedure will allow you to know what objects you have, its current location, who has legal ownership, and help you to advertise any object disposals. 

Legal ownership of the objects needs to be established and understood to allow disposal of any collection items. Questions to ask are: 

• Does the governing body own all the items? 
• Are any artefacts on loan from other institutions or individuals? 
• Is the ownership uncertain?  

Depending on the answer then different processes will need to be followed. There is information about how to do this successfully in our advice section Introduction to Disposal and on The Collection’s Trust website. 

The people who will undertake the documentation work, monitor the collection, and manage transfers need to be factored into the closing process. If the museum is volunteer run, then volunteer’s goodwill to support the whole process will be essential. If the process will be handled by paid staff then their contracts need to remain in place for a sufficient period. 

Items legally owned by the governing body are assets that can legally be disposed of, but there are ethical considerations. Depending on the funding of the acquisition or stipulations that were agreed with the donor, these items may need to be returned rather than passed on to another public body. Your governing document should contain a statement that allows the collection to be transferred to another charitable body with similar objectives. Don’t assume that any other organisation will be able to take on your collection without first talking to them about it. 

Independent museum collections are potentially at risk if they are also a company which goes into administration. Unless the collection is held in a special charitable trust, and as such is unavailable for distribution upon insolvency, then collections are treated as financial assets and can be sold off to meet the museum’s debts.  

Moving an item from the museum’s care to somewhere else will take time and resources. The items will need to be packed correctly, stored, and physically moved. Consideration of who is going to undertake these tasks and how they will be funded needs to be factored into any winding up process. 

All loans from individuals and other organisations will need to be returned to their legal owners.

Your loan agreement records should provide you with all the details to help with this. Contact the lender to explain the situation and ensure that this is done with enough notice to allow for the physical return and be aware of any costs that will need to be covered such as transportation. Information about loan in procedure is available on The Collections Trust website. 

Objects currently not in your physical care but legally owned by the museum will need to be factored into the whole collection disposal as they’re still your responsibility. It may be that the organisation that currently has them on loan is an appropriate place for them permanently, but this shouldn’t be assumed.

When the legal ownership is unclear there are additional legal and ethical issues to consider. Further information about how to deal with objects with unclear ownership is available from The Collections Trust website.