Museum files for bankruptcy, looks to future

Faced with an increasingly grim balance sheet, the Downeast Heritage Museum filed a petition of bankruptcy on September 14 at the federal court in Bangor. The board of directors hopes the court will restructure their current debt of $3.2 million to a level that reflects the true market value of the nonprofit corporation's assets.

Executive Director Jim Thompson and board President Jim Porter broke the news to reporters on September 15, telling them bankruptcy is the only alternative to shutting down the facility and selling off its assets, probably at a fraction of their cost. The officials said the institution's high debt has discouraged potential donors and grantors who want to finance new projects and "don't want their money used to pay off old debts."

The museum's debt consists solely of the mortgage, with $2.6 million held by U.S. Department of Agriculture's Rural Development and $150,000 each by four local banks, Calais Federal Savings and Loan, Machias Savings, Bangor Savings and The First. Since 90% of the banks' risk is guaranteed by USDA Rural Development, the actual exposure of each is only $15,000, leaving the federal agency holding the bag of more than $3.1 million.
An emergency state grant of $300,000 and $21,500 this summer from funds controlled by Governor Baldacci kept the wolf from the museum's door, along with personnel layoffs and salary cuts initiated earlier. Still, cash on hand now is down to $200,000, even though mortgage payments of $18,000 per month have been suspended. On the positive side, Thompson noted that the level of visitors this year has almost doubled, and income from visitors has kept pace with last year, even though admissions fees were eliminated in favor of donations.

Attorney Stephen G. Morrell of Eaton Peabody's Brunswick office, who represents the museum in bankruptcy court, said by phone he hopes the parties can agree on how the debt will be restructured in the next few weeks. "The key issue," he said, "is how much of the debt will be discharged." He said he is "optimistic" a plan, developed by the lenders and the museum's board, and approved by the court could be in place "by the end of the year."
In a review of the museum's special offerings and activities so far this year, the directors list two showings of a documentary film about the Passamaquoddy people and culture; holding workshops in Passamaquoddy basket making; hosting meetings on such topics as the FDR International Trail and a regional gathering of artists and artisans; premiering a film on Acadia and Acadians and hosting discussions of related topics; presenting the film Sunrise at Campobello; assisting play performances by the Calais Community Theater; exhibiting sculpture by a Sullivan artist; providing tours and meeting sites for about 30 international and regional groups.

From June through August, the museum had 4,639 visitors. The gift shop has been expanded and now purveys the work of 16 artists and artisans from Washington County, as well as many other Maine products.