The News Desk is a collection of news, notes and breaking items affecting the Fredericksburg community.
Slavery museum files plan to pay its debts
BY CHELYEN DAVIS
RICHMOND—The bankrupt U.S. National Slavery Museum has filed a reorganization plan that counts on $900,000 per year in donations and would repay the city of Fredericksburg $15,000 per quarter for back taxes.
The museum, founded by former Gov. Doug Wilder and intended to be built in Fredericksburg, owes creditors about $7 million.
In documents filed with the federal bankruptcy court in Richmond, the museum’s lawyer, Sandra Robinson, said the museum’s reorganization plan is based on an expectation that the museum will be able to raise charitable donations. The museum is working to regain its state authority to raise funds.
“The Debtor is committed to making its best effort to broaden its donor base and to utilize lower-cost options to effectuate fundraising,” Robinson wrote. “The Debtor is optimistic that its fundraising efforts will be sufficient to perform under the Plan as Debtor has been approached by several volunteers and potential contributors since the Petition Date.”
She said the museum “conservatively estimates” that it can raise $900,000 in its first full year of fundraising, and that donations in subsequent years will increase by 50 percent.
If that held true, the museum would plan to repay its two secured creditors, starting this October, over the next four years.
Fredericksburg is one of those secured creditors, and Robinson said the plan calls for the city tax bill to be repaid in full over four years, with payments of $15,000 per quarter being made.
Jeffrey Scharf, the city lawyer in these proceedings, said creditors may vote to accept or reject it, or file objections to the plan if it does not comply with the law.
At this time, the city of Fredericksburg has not agreed to the proposed plan, Scharf said.
The other secured creditor is Pei Partnership Architects, listed in the bankruptcy documents as being owed $3.68 million.
In April 2010, a New York court awarded the architectural firm $5.17 million in a lawsuit against the slavery museum. C.C. Pei, the company’s principal and a son of famous architect I.M. Pei, had designed the museum, although construction never began.
The organization plan calls for the remainder of Pei’s court judgment to be repaid over four years.
The museum also has a number of unsecured creditors, and the plan calls for those to be repaid in annual installments.
Robinson argues in the document that this reorganization plan is the best option for creditors, because if the museum were moved into liquidation, creditors would not be fully repaid.
Robinson did file two documents to remove two unsecured creditors—Hirschler Fleischer and Lexington Acquisition Inc.—from the list of creditors, arguing that both filed after the expiration of a statute of limitations.
Robinson suggested in her document that she has run the plan by those creditors before filing it.
“These efforts have included discussions and negotiations with certain secured creditors of the Debtor, and foretell Debtor’s success in reorganizing with slight modifications to the many engineering and architectural drawings that Debtor has already paid, collectively, millions of dollars to obtain.”
Robinson said the museum’s reason for filing for bankruptcy protection last fall was to stop the city of Fredericksburg from auctioning the museum’s 38 acres of land for back taxes.
The museum owes the city about $254,000, an amount accrued since the museum stopped paying taxes in 2008.
Robinson claims the city’s refusal to grant the museum tax-exempt status contributed to its woes.
“Debtor had envisioned, though, that its project (the building and land) would achieve the tax-exempt status as many other non-profit organizations in the City of Fredericksburg had received,” Robinson wrote. “The denial of tax-exempt status, coupled with the Debtor’s cessation of active fundraising created a significant level of financial hardship for which the Debtor was unprepared to immediately handle.”
The City Council refused to grant the museum’s request for tax-exempt status—worth $43,000 per year—because the museum had not begun construction on its property, the test the city used for deciding whether it qualified.
City officials were also disturbed by delays in museum construction and a lack of communication from Wilder and museum officials.
Robinson wrote that the museum also lost its paid staff, which affected its ability to maintain its state authority to raise funds.
“Rather than regrouping and resuming operations with different (volunteer or cheaper) staff, Debtor ceased all actions relative carrying out its mission until the City of Fredericksburg, by its action to sell the Debtor’s property, threatened any likelihood that the Debtor could recover and accomplish its mission,” Robinson wrote. “In an effort to preserve its estate and its mission, the Debtor filed for bankruptcy protection under Chapter 11.”
While the museum has pinned its hopes on fundraising, it may have some competition.
The city of Richmond is also looking at creating a slavery museum, based around sites in the city where slaves were held, sold and buried.
Richmond, too, wants to call its museum the U.S. National Slavery Museum.
Del. Deloris McQuinn, D–Richmond, said the Richmond City Council Slave Trail Commission wants to build a heritage site around the city’s Shockoe Bottom area, with a building to house artifacts and a genealogy center, and incorporating the site of slave holding pens and a slave burial ground. The city already has a slave trail around those sites.
That group is gearing up to start soliciting donations, McQuinn said.
She did not discuss Wilder’s museum, but said Richmond’s slavery-related sites have an authenticity that would be difficult to match. The city was “the epicenter” of the slave trade in the region, she said.
“There’s a profound presence when you walk the trail,” McQuinn said. “You know something happened there’s a spirit there.”
As for the Fredericksburg museum, it’s due back in bankruptcy court on Feb. 29, for a scheduled status hearing on the case.
Chelyen Davis: 804/343-2245