Non-profit charitable organizations are also able to take advantage of the workout provisions of the federal bankruptcy law. For example, a children’s museum in Pennsylvania, called the Please Touch Museum, raised new donations and compromised several debts so that it is now ready to emerge from bankruptcy. The museum had incurred a $60 million debt that it could not pay when it moved from Center City Philadelphia to Fairmont Park in 2008. It filed a Chapter 11 in September and recently received the approval of the bankruptcy judge to compromise the bulk of its debt for a payment of $11.25 million.
The museum, which has been in existence for 40 years, raised $7.86 million in donations while it was in bankruptcy, and it will get the balance of the closing funds from its reserves being held from a 2006 bond sale. According to the new C.E.O., who will take over post-bankruptcy, she raised the new contributions on the strength of selling the new features and services that the museum will offer when it reopens. These updates are aimed at a new generation of children who will enjoy the evolving features that the museum intends to introduce.
The future programs that were stressed include bringing the museum into the digital age with appropriate exhibits. The exhibits and works of art are all geared toward practical use by the children, hence the name of Please Touch. The new C.E.O. stressed that the contributions came from stressing the future and not the debt problems.
The museum’s bankruptcy exit and its entrance into a new era of growth and rebuilding is a strong example of how a Pennsylvania non-profit can benefit by obtaining bankruptcy debt relief and reorganization. Several of the museum’s creditors agreed to reduce or eliminate their bills. Some of the larger creditors, like the City of Philadelphia, reduced their bills considerably and threw in grants to boot. Any small business, profit or non-profit, can find out the feasibility of filing a bankruptcy by consulting with a law firm that is experienced in business bankruptcy cases.
Source: philly.com, “Please Touch Museum is out of bankruptcy“, Harold Brubaker, Mar. 17, 2016