New York Magazine is reporting that The Metropolitan Opera has decided to use the 30 x 36 foot Chagall paintings in the lobby as collateral on pre-existing loans. That’s important. They’re substituting the paintings for other collateral, instead of taking out new loans against the paintings:

In a move described by a Metropolitan Opera board member as “a decision of last resort,” the company has collateralized the giant Chagalls in its lobby. Titled The Triumph of Music and The Sources of Music, they were commissioned for Lincoln Center when it was new. Now they’re sources of cash. General manager Peter Gelb, already forced to scale back his 2009–10 season, first disclosed the intention to collateralize the paintings so as “to deal with a cash-flow situation” n January, according to a source at the meeting. Met spokesman Peter Clark confirmed the news, saying that “the Met has had a long-term loan for a number of years which relied on cash holdings as collateral. The Chagalls are now being used as partial replacement collateral in order to free up some of the use of the cash.” (A source says the Chagalls were appraised at $20 million.) “If you have some great art sitting on the wall, why not use it as collateral?,” noted former Met CFO Marvin Suchoff. “It beats selling it for cash.”

Met Borrows Against Lobby Chagalls (New York Magazine)