By editorial board • 

Bankruptcy the best bet for long-lasting museum

Filing for bankruptcy is deeply imbued with negative connotations.

But in the cases of the McMinnville troika of Evergreen International Aviation, Evergreen Vintage Aircraft and the Michael King Smith Foundation, going to court  promised much-needed relief. It allowed the time and supportive framework for a more orderly and advantageous outcome.

Evergreen International Aviation, parent company centerpiece in the late Del Smith’s aviation empire, filed for Chapter 7 in U.S. District Court in Delaware at the end of 2013. It was joined by an array of subsidiaries in the filing, designed to facilitate an orderly dissolution with fairness for all.

Evergreen Vintage Aircraft — a subsidiary holding title to two major elements of not-for-profit Evergreen Aviation & Space Museum, across Highway 18 from Smith’s for-profit corporate complex — filed for Chapter 11 in U.S. District Court in Oregon almost exactly one year later. The Michael King Smith Foundation — owner of the other two major elements, the space museum and water park — followed Tuesday with an Oregon Chapter 11 filing of its own.

Chapter 11 affords the filer a chance to fend off creditors while undertaking reorganization. That typically involves establishing a white knight investor willing to infuse new capital on favorable terms.

Thanks to the safe haven of bankruptcy court, Evergreen Vintage Aircraft, whose holdings included the aviation museum, about two dozen of its planes and the adjacent aviation-oriented theater, was able to do just that. It received backing from the nonprofit, aviation-oriented Collings Foundation and unnamed foundation associates.

The company’s chief creditor, Oregon-based Umpqua Bank, had run out of patience with private negotiations. The bank was on the verge of forcing sale of Evergreen Vintage’s tangible assets on the steps of the Yamhill County Courthouse until the Chapter 11 filing placed the proceedings on hold.

The Michael King Smith Foundation is making a virtually identical move for a virtually identical reason, and the same man is behind it — nationally renowned bankruptcy specialist Jay Goffman of the New York firm of Skadden, Arps, Slate, Meagher & Flom LLP. The foundation was seeking relief from Oregon-based Hoffman Construction, whose Wednesday courthouse sale was forestalled by the Tuesday afternoon filing.

The corporate entities were forced to file under Chapter 7, while the museum entities were able to file under the more favorable Chapter 11, for two simple reasons.

First, the museum buildings are so large and unique, there is almost no commercial purpose to which any of them but the water park could possibly be put. That doesn’t make seizing them or snapping them up at auction particularly attractive.

Not so with the corporate office buildings on the other side of the highway, which are extremely versatile.

Second, there are plenty of well-heeled aviation enthusiasts around the country, both institutional and individual, willing to invest in a museum of this scope and quality. It’s a matter of heart rather than wallet.

We are confident the foundation is making the right move, and will emerge the better for it. Long live the museum.


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