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Museum gets delay in bankruptcy case

MORE: National Slavery Museum timeline and archives

By Chelyen Davis

RICHMOND—A federal bankruptcy judge here  Wednesday agreed to give the U.S. National Slavery Museum another month to restart fundraising and come up with a reorganization plan.

At a status hearing in federal bankruptcy court, Judge Douglas Tice Jr. agreed with museum attorney Sandra Robinson’s request for more time to provide a plan she said should address concerns raised by the city of Fredericksburg’s lawyer.

Former Gov. Doug Wilder, the museum’s founder, was not in court; he had previously said he had an out-of-state speaking engagement.

By the end of January, the museum’s new accountant plans to have filed federal tax returns for the museum for the years between 2008 and 2011—those returns were never filed. Robinson told the judge that those returns are required before the state will renew the museum’s authority to raise charitable donations. She said she hopes to get that authorization renewed, and then build a reorganization plan based on projections of how much money the museum might be able to raise in donations.

Those two activities—renewing the fundraising authority and filing a reorganization plan—haven’t happened yet, Robinson said, largely because she had little luck getting financial information from the museum’s former accountants.

“I was getting absolutely no cooperation from the museum’s former accountant,” Robinson said.

But once the museum hired a new accountant last month, she said, the former accountant handed over the information.

The new accountant—William Allan Jones Jr., who is working pro bono—has promised her he will file all the past-year tax returns by the end of the month, Robinson said. That will allow the museum to reapply for fundraising authority, and she said the museum’s board has met to discuss how to move forward with fundraising.

From there, she plans to write a reorganization plan, with input from the museum’s secured creditors, which include the city of Fredericksburg.

That plan will be based on projections of how much money the museum can raise in donations. The museum owes about $7 million, including about $254,000 in back taxes to the city of Fredericksburg on the museum’s land. The city is planning to auction off the museum land if the taxes aren’t paid.

Last month, the city’s attorney for the case, Jeffrey Scharf,  filed motions in court requesting that the court appoint an examiner to investigate the museum’s tax filings. He specifically questioned the 2005 IRS Form 990, which must be filed by all nonprofits, in which $1.6 million seemed to be unaccounted for. Robinson, in her own filing, said that money was listed in a line that covered the purchase of “various fixed assets.” Yesterday she agreed to provide by Feb. 14 an analysis of that particular tax return.

Scharf also wanted to move the case to Chapter 7, which would require the museum to liquidate.

Scharf said he supports Robinson’s request for more time to file a reorganization plan.

He said the museum’s hiring of a new accountant—different from the one who filed the original returns—should accomplish his goal of having someone inspect the old financial filings.

Hiring the new accountant “might give us the benefit of an examiner without imposing the cost on the estate,” Scharf told the judge.

He said Fredericksburg is also encouraged by the timetable and deadlines Robinson set.

Scharf said he does “still have some skepticism as to how this reorganization can come to fruition,” given that the museum’s past fundraising was, as he termed it later, “very sporadic.”

Scharf asked that Tice continue his motions for an examiner and to move to Chapter 7, in case the museum fails to fulfill its reorganization plan.

An attorney for Pei Partnership Architects—a New York architectural firm that designed the unbuilt museum and is now owed $3.68 million by the museum—had filed motions supporting Scharf, and agreed Wednesday to give the museum more time.

“We’re comfortable with 30 more days to see some results,” said attorney Milton Johns.

Tice called Robinson’s proposal “an ambitious-sounding plan” but said the museum should have a chance to show it can reorganize.

The case will be back in court for another status hearing on Feb. 29 at 2 p.m.

Chelyen Davis:  804/343-2245