CHICAGO — Bondholders owed nearly $20 million will settle for $50,000 in a bankruptcy settlement plan for a Nebraska museum that rarely generated enough money to service any of its debt in the 14 years it's been open.
Supporters, including former Nebraska Gov. Frank Morrison, hoped the Great Platte River Road Memorial, a museum dedicated to American pioneer history, would capture Interstate 80 travelers to become one of the state's top tourist attractions.
But the facility, built in a massive archway straddling I-80 near Kearney, 180 miles west of Omaha, struggled from the day it opened in 1999. The recent bankruptcy marks the second major haircut for bondholders, who 10 years ago agreed to settle for $20 million of debt to pay off $60 million originally floated for construction.
In March, the organization filed for Chapter 11 bankruptcy in an effort to shed the $20 million of bond debt. A final bankruptcy exit plan was approved in late September, and the museum now is in the midst of a 90-day period during which it must pay creditors.
The settlement gives $50,000 to bondholders who are owed nearly $20 million.
"I think the bondholders wanted some finality because they weren't being paid a lot of money," Randy Wright, a bankruptcy attorney at Omaha-based Baird Holm LLP, which represented the archway museum in the case. "I think they thought it was time to be done with this particular obligation."
Investors are mostly small retail buyers located across the country, with few local holders.
The bonds are backed by a mortgage on the museum building and the revenue generated by the facility.
But to stay open, the building is required by state lease to be operated as a museum, and investors would need to pay costs of insurance and maintenance. The cost of demolition of the structure would likely cost more than could be recovered from liquidation, Wright said.
"They have a lien on the arch, but the question is, what's that worth?" he said. "Nobody really knows, but we don't think it's sale-able. That's why we proposed $50,000 and the bondholders voted for it. I guess that was sufficient for them."
Of the $20 million, investors holding roughly $13.8 million voted in favor of the bankruptcy plan, according to Wright. Holders of another $43,000 voted against the plan, but none formally objected in court.
Unsecured vendors will get another $50,000. The museum will also pay $40,000 in attorney fees and priority claims to close the case.
The facility has raised the $140,000 from donations from residents and others, Wright said.
The city of Kearney in 1998 originally floated $60 million of unrated, tax-exempt industrial development revenue bonds to finance the facility for the Great Platte River Road Memorial Foundation. After tapping reserve funds to pay the interest-only debt service payments in 2002, the borrower and bondholders went to court in 2003. The settlement trimmed the original $60 million of serial bonds down to $20 million of capital appreciation bonds and $2 million of current interest bonds.
The museum did not generate enough money to cover the $2 million of current interest bonds, and defaulted on the $20 million of CABs when it failed to make the single balloon payment due on Sept. 1, 2012.
The bankruptcy plan allows the museum to shed nearly all of its debt. There are no more borrowing plans on the horizon. Meanwhile, supporters hope a newly opened highway exit near the museum will boost ticket sales.
The archway is a multi-story building featuring interactive exhibits about American pioneers who passed through Nebraska on their way West and "brings the westward migration to life," according to its web site.
Pioneers on most well-known trails, including the California, Oregon, and Mormon Trails and the Pony Express, used the Great Platte Road.
More recently, the museum was the location for a final scene in the Jack Nicholson movie "About Schmidt."
