Museum of American Jewish History (d/b/a National Museum of American Jewish History)

March 1, 2020

The Smithsonian-affiliated non-profit Museum of American Jewish History filed for bankruptcy in Pennsylvania earlier this month due to a shortfall from (i) sales of memberships and tickets to the Museum, (ii) event revenue, (iii) endowment income and (iv) charitable contributions relative to operating expenses. It appears to suffer from a chicken and egg problem: on one hand, it has too much debt and donors are fearful of contributing to a doomed enterprise and yet, on the other hand, it has too much debt and so the enterprise needs donors to NOT be fearful and donate to service said debt. Round and round we go.

The Philadelphia Authority for Industrial Development issued $30.75mm of Revenue Bonds in 2015 to help refinance the construction loan the Museum originally took on upon its location change in 2007 (Series A bonds are held by BNB Bank and Series B bonds are held by approximately 12 individuals). The bonds are secured by … well, basically nothing. There really couldn’t be a more meaningless security interest as the bondholders didn’t exactly get real property rights and there isn’t a whole lot of collateral or receipts, and property intended for exhibition, education or research is expressly carved-out (according to the papers).

Museum performance has been lackluster out of the gait. Per the Museum:

Since opening in 2010, the Museum’s revenues from gate receipts and events have been inconsistent. Accordingly, in 2017, the Museum reduced its operating expenses by eliminating some paid positions and by making other expense reductions. However, following such reduction in operating expenses, the Museum’s revenues have remained at a level which is insufficient to fully fund its expenses and its debt service.

Eesh. Rough. Subsequent restructuring talks with UMB Bank, BNB Bank and, presumably, representatives on behalf of the Series B noteholders proved futile. They’re undersecured and their bonds are basically worthless: it’s really quite that simple. Unfortunately, the Museum requires bankruptcy to drive that point home and attempt to figure out a restructuring of those bonds.

A quick digression admittedly grounded in opinion rather than fact: much like the United States is “over-retailed” per capita, we’re of the opinion that the United States is likewise over-Museumed. There are more than 35,000 museums in the United States. There are more than 100 museums in the city of Philadelphia. There are dozens of Jewish museums in the United States. Philadelphia is a big (and growing) city and it is entitled to a museum. But with other major Museums located nearby in New York and Washington DC, a general increasing secularization of the US population, and a diminishing number of people who, per various studies, identify as Jewish, it seems increasingly tenuous to maintain this large number of institutions. It’s a shame. But it’s a sad reality. Dont @ us.

• Jurisdiction: E.D. of PA (Judge Coleman)

• Capital Structure: $30.75mm (UMB Bank NA)

• Professionals:

  • Legal: Dilworth Paxson LLP (Lawrence McMichael, Peter Hughes, Yonit Caplow)

  • Claims Agent: Donlin Recano (*click on the link above for free docket access)

• Other Parties in Interest:

  • Successor Indenture Trustee: UMB Bank NA