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Slavery Museum faces court deadline

MORE: National Slavery Museum timeline and archives

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RICHMOND—The bankrupt U.S. National Slavery Museum has until June 6 to win over creditors to its reorganization plan, and prove to a judge that the plan is feasible.

That’s the date for the museum’s next hearing, set after a brief appearance by the museum’s lawyer before Judge Douglas O. Tice Jr. in federal bankruptcy court in Richmond on Wednesday.

Sandra Robinson, attorney for the museum, told Tice no creditors have filed objections to the disclosure statement she filed earlier with the court.

The museum, founded by former Gov.  Doug Wilder and planned in Fredericksburg, owed about $7 million to creditors when it filed for bankruptcy protection last September.

Its largest creditor is the New York architectural firm Pei Partnership Architects, which is owed $3.68 million, according to court documents.

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.

A portion of what Pei says it is owed is interest on the debt.

Robinson’s initial reorganization plan called for Pei to be repaid only the principal owed, not interest, something Pei’s attorney said he objected to in a hearing several weeks ago.

An amended plan Robinson filed with the court this week allows some interest to be included in Pei’s repayment.

Pei is the only creditor allowed to vote on the plan, Robinson said, because it is the only creditor the plan doesn’t repay in full.  The company must vote yes or no before June 6.

Other creditors, including the city of Fredericksburg, may file objections, said Jeffrey Scharf of Taxing Authority Consulting Services, which is representing the city in the case.

The museum owes Fredericksburg about $254,000 in back real-estate  taxes, which continue to go unpaid.

Last week Robinson filed an objection to Fredericksburg’s claim, saying the city had filed two days past the deadline for creditors to file. There was no action on that objection on Wednesday; Robinson and Scharf were due to discuss it privately after the hearing.

The reorganization plan relies on an assumption that the museum soon will resume fundraising—its only source of income.

Robinson said the museum’s certification to solicit charitable donations in Virginia was reinstated last month after she filed four years of missing federal tax returns. On the state’s registry, the museum is listed as having a registration that expires in May 2013.

Robinson said she is not planning to file those tax returns with the court, nor to make them publicly available.

The IRS has revoked the museum’s tax-exempt status for fundraising because it had not filed tax returns for at least three years; Robinson said she hopes to get it back by the end of the month.

The museum’s reorganization plan is based on an expectation that when the museum resumes fundraising, it could raise $900,000 in donations in the first year and more in following years.

The plan calls for Fredericksburg and Pei—the two secured creditors—to be repaid over four years.

Tice told Robinson on Wednesday that  at the June 6 hearing she will have to show that the plan is feasible.

Chelyen Davis:  804/343-2245