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Slavery Museum responds to Celebrate Virginia

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The bankrupt U.S. National Slavery museum says Celebrate Virginia has no right to attempt to force the museum to liquidate.

In recent filings with the bankruptcy court in Richmond, museum attorney Sandra Robinson argues that since Celebrate Virginia no longer owns the land on which the museum was to be built, it is not a creditor and has no standing to be involved in the bankruptcy case.

“Celebrate VA does not hold a financial stake in the Museum’s bankruptcy case—without regard to whether it is a Chapter 11 or a Chapter 7 case,” Robinson wrote. “When Celebrate VA conveyed the land to the Museum, it relinquished all rights, title and interest in the land.”

Celebrate Virginia donated the 38 acres in Fredericksburg that was intended to house the never-built museum. Two weeks ago, attorneys for Celebrate Virginia filed documents asking the bankruptcy judge to convert the museum’s bankruptcy from reorganization to liquidation.

Celebrate Virginia’s filing argued that by never building a museum, failing to keep up the property, falling into debt and allowing creditors to have liens on the property, the museum is greatly diminishing the property’s value.

The land is the museum’s only real asset, and is valued at around $7.6 million—down from about $19 million when it was donated a decade ago.

The museum needs that land to reorganize, Robinson wrote.

She also filed an objection to the Hirschler Fleischer law firm representing both Celebrate Virginia and Hilldrup Cos. of Stafford County in the bankruptcy case. Hilldrup has been storing museum artifacts and other items, and now wants to be paid for that storage and for the museum to move its items out of the storage facility.

Robinson said Hirschler Fleischer has a conflict of interests because it represented the museum several years ago when it was trying to convince the city of Fredericksburg to exempt it from real-estate taxes.

That attempt failed, and the museum now owes the city more than $250,000 in unpaid taxes. When the city threatened to auction the land to recoup the tax debt, the museum filed for bankruptcy.

“During the course of Hirschler Fleischer’s representation of the Museum, the Museum shared with Hirschler Fleischer certain confidential and proprietary information,” Robinson wrote.

In other filings in the case, the city of Fredericksburg’s treasurer’s office is formally supporting Celebrate Virginia’s motion to move the museum’s bankruptcy to liquidation. The filing essentially reiterates a filing from late May, in which the city’s attorney—Jeffrey Scharf of Taxing Authority Consulting Services—said he doesn’t believe the museum’s reorganization plan is feasible.

“Given the history of debtor and the current climate for development of its project, the proposed plan is not feasible or realistic and the likelihood of reorganization is remote,” Scharf wrote.

Early in the case, Scharf had suggested moving the case to Chapter 7, but he withdrew that to let the museum try to reorganize.

The next hearing in the case is scheduled for next week in Richmond.