S.F.’s Festival 2000 Faces Bankruptcy : Funding: The 23-day, multicultural arts festival is $500,000 in debt. Its board met Wednesday to consider Chapter 11.

Festival 2000, a Bay Area multicultural arts festival running through Sunday, is $500,000 in debt and is strongly considering bankruptcy. But many of the presenting organizations in the $2.3-million festival are going ahead despite the loss of financial backing.

Al Williams, vice president of the Festival 2000 board of directors, said the organization’s outstanding financial obligations include $170,000 in contracted fees to a variety of arts groups. Among them are American Conservatory Theatre, which is owed $32,000, and the American Indian Dance Theatre, owed $25,000.

Williams said the board of directors met Wednesday to consider filing for Chapter 11 bankruptcy, but no announcement had been made by Thursday afternoon.

Lawyers from the Indian Dance Theatre have contacted the board of Festival 2000 regarding fees owed for its performance at the opening night gala Oct. 6.

“We’ve been informed they intend to file legal action,” Williams said. “If we find ourselves being sued by a number of people we may have no recourse but to file for bankruptcy.”

But Williams also said: “The board has not resigned itself nor thrown up its hands over this debt. We’re still looking for ways to meet our obligations.”

The festival, billed as “one of the most comprehensive celebrations of the arts ever held in an American city,” was slated to present during its 23-day run more than 200 performances and a total of 54 performing and visual arts events, primarily by African-American, Asian-American and Latino artists. The city endorsed the event with a contribution of $500,000 from the Grants for the Arts agency.

But Oct. 17, after 11 days of events, executive producer Lenwood Sloan announced that the festival had “suspended operations as a presenting and producing organization” due to a “shortfall” in fund-raising, lower-than-expected box-office receipts and a 5%-10% cost overrun.

Sloan, who was on an undisclosed salary until that date, then volunteered his services. When contacted Wednesday, Sloan said only that the festival had run out of funds and that “there’s a very strong movement in action by the board to meet their responsibilities.” Sloan referred all other questions to Williams.

Sloan is scheduled to become the director of the $4.4 million Inter-Arts Program at the National Endowment for the Arts in November. Kathy Christie, NEA press officer, read an NEA statement that concluded: “Mr. Sloan has our respect and complete confidence.”

“We are familiar with the financial difficulties experienced by Festival 2000. . . . While it appears the scale of Festival 2000 might have been overambitious, and certain support planned for it did not materialize, its performances and exhibitions have received widespread acclaim for their artistry and creativity,” the statement said.

“To our knowledge, the financial problems of Festival 2000 were due to a number of circumstances and were completely beyond the ability of any one individual to control.”

Kary Shulman, executive director for S.F. Grants for the Arts, said her agency launched the festival effort two years ago with a $500,000 grant and the hiring of Sloan, a New York based arts consultant producer and the former deputy director of the California Arts Council.

“We made the initial $500,000 investment and then it seemed clear the festival needed its freedom,” Shulman said. “Other than putting in the money, we actually did very little. Perhaps we should have done more.”