By Nicole Montesano • Staff Writer • 

Judge approves Evergreen Vintage Aircraft bankruptcy settlement

Museum attorney Justin Leonard told Dunn, “Nobody is really happy with the settlement as proposed, including the museum. But everybody sees it as the best way to settle a very complex issue.”

Evergreen Vintage was a holding company for the now-bankrupt Evergreen International Aviation. It owns two of the museum’s major buildings and 25 of the vintage aircraft it has on display.

The settlement allows the museum to obtain ownership of 17 of those planes, thanks to an anonymous donor who is putting up the purchase price. And it puts ownership of the two buildings in the hands of a friendly owner, who has agreed to a 20-year lease at $50,000 per month, down slightly from the museum’s current payment.

Mediation produced the complex settlement agreement, which has EVA creditor Umpqua Bank, owed more than $42 million, agreeing to settle for $20.5 million. The deal satisfies claims filed by the trustee of the now-bankrupt Evergreen International Aviation, as well as claims related to the estate of Evergreen founder Del Smith.

The settlement was contested by World Fuel Inc., which held liens on two of the aircraft against what originally amounted to $9.1 million in unpaid Evergreen International Aviation fuel bills. It contended the settlement did not adequately satisfy the remainder of that debt, which is in dispute but runs about $7 million.

The settlement calls for the sale of one aircraft, a DeHavilland DH 4M1 put up as collateral on debts to both Umpqua and World Fuel, and establishes a division of proceeds. The parties agreed to let EVA and World Fuel litigate competing claims on the the remaining aircraft, a Douglas B26 invader.

On Wednesday, World Fuel sought to have Thursday’s hearing postponed, saying medical issues prevented its appraisor from attending. Dunn denied the motion, saying it was not filed in a timely fashion.

World Fuel also made a last-minute attempt to settle out of court with EVA, but it was rejected.

Presented with dueling appraisals on the DeHavilland, one pegging its value at $2 million and the other at $700,000, Dunn took the course he signaled earlier he would if the parties were unable to settle the issue on their own. He split the difference and valued the plane at $1.3 million.

He then ruled that, since the settlement calls for withholding $1.5 million to cover expenses, back property taxes and remaining World Fuel claims, that was sufficient to let the settlement proceed.

Dunn said the parties could seek a hearing at a later date if they continue to disagree on the value on the aircraft, which is unique. But in that event, he warned  World Fuel it must produce a more persuasive appraisal than the one it has been relying on, which dates back to 2012.

Dunn chastised all of the parties for their conduct in the case. He had cautioned repeatedly that their continuing infighting threatened to scotch the whole deal, to their detriment.

The settlement terms, first detailed in early May, provide the new owners of the two museum buildings a lien on the Spruce Goose, the museum’s massive centerpiece exhibit. The museum has agreed not to use the Spruce Goose for collateral in any loans it may obtain.

They call for the Michael King Smith Foundation, which owns the Wings & Waves Waterpark, to provide the museum with a five-year, triple-net, zero-sum lease on the facility. In exchange for getting the facility rent-free, the museum assumes responsibility for taxes, insurance, utilities and maintenance.

The Smith Foundation grants the museum right of first refusal, should the water park ever be put up for sale. The museum and the Collings Foundation also grant each other first right of refusal to the Spruce Goose and museum buildings, should they ever be put up for sale. 

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