Tuesday, December 16, 2014

Evergreen Aviation museum caught off-guard by bankruptcy filing, but operating sustainably, lawyer says

Directors of McMinnville's Evergreen Aviation & Space Museum were surprised by the timing of last week's bankruptcy filing by Evergreen Vintage Aircraft, a for-profit entity that owns about 25 of the aircraft on display at the museum.

Even so, the museum is operating on a "sustainable" basis and expects to continue to do so, its attorney said Tuesday.

"We're going through what could be a very positive and significant transition," said Salem lawyer and former legislator Kevin Mannix, one of the museum's two lead attorneys.

Mannix said the museum's board has been thinned from about 30 members to about 15 members who met for three hours Monday in the wake of Evergreen Vintage's Chapter 11 filing. They discussed a range of issues related to the museum's operation, including its tax-exempt status and the bankruptcy filing.

Mannix acknowledged that the museum still is negotiating a final payment to the Aero Club of Southern California, the organization that sold the museum its anchor attraction, the Hercules Spruce Goose flying boat.

A lawyer for the Aero Club said the matter remains unsettled.

"We consider them to be in default," Bob Lyon, the lawyer, said by telephone Tuesday. "We are exploring our remedies."

The museum says it has more than 180 aircraft and artifacts. Mannix said "at least 50" are directly owned by the museum. Another 25 are owned by Evergreen Vintage Aircraft and the rest are on loan from government agencies or private owners, he said.

Evergreen Vintage's preliminary bankruptcy filing said it had assets of between $50 million and $100 million and liabilities between $100 million and $500 million.

According to its filing with the Oregon Department of Justice, the non-profit museum had revenue last year of $7.57 million and net assets valued at more than $11.66 million.

Mannix said the non-profit museum pays no rent for the buildings it occupies on the McMinnville campus. He said the Wings and Waves waterpark and the space museum building sit on parcels owned by the private Michael King Smith Foundation, created by Evergreen founder Delford Smith, who died last month.

The main aviation building, which houses the Spruce Goose, and its nearby theater building are owned by Evergreen Vintage, the for-profit entity that sought to reorganize its debts in bankruptcy court, Mannix said.

Despite Evergreen Vintage's filing in bankruptcy court, "the vast majority of the campus has no debt," Mannix said.

Further, Mannix said, the museum faces no "looming issue" with the Internal Revenue Service, which examined whether its operations merit a tax exemption.

"We have a satisfactory solution," he said. "We're happy and the IRS is happy."

The IRS had examined the non-profit museum following a request by the Oregon Department of Justice, which investigated whether the museum's finances were improperly entwined with those of Evergreen International Aviation, the for-profit aviation services company that sits across Oregon Highway 18 from the museum.

When Evergreen International Aviation filed for dissolution last December in federal bankruptcy court in Delaware, the state agency said, its investigation was rendered moot.

Still pending is a tax dispute with Yamhill County, which argues the museum should be taxed on some of its revenue-producing operations. Mannix said the museum continues to wait for a decision from the Oregon Tax Court. The cumulative impact of an adverse decision would approach $1 million, he said.

Story and Comments:   http://www.oregonlive.com


http://media.oregonlive.com/business_impact/other/Evergreen Museum

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