Archway Museum Cleared to Leave Bankruptcy

A heavy debt has been lifted from Nebraska’s infamous Archway.

With a bankruptcy judge’s signature, the Chapter 11 exit plan for the Great Platte River Road Archway has canceled the 13-year-old museum’s promise to pay back more than $19 million worth of bonds that were used to construct it.

The pioneer-honoring museum—a 1,500-ton structure that sits atop beams that straddle Interstate 80—intends to pay back those investors a total of $50,000, according to the plan filed with the U.S. Bankruptcy Court in Lincoln, Neb. The bankruptcy-exit plan approved last week by Judge Thomas Saladino leaves it pretty much debt-free.

Officials said that the museum’s heavy debt burden made it tough to rally donations. If it managed to clear those debts through bankruptcy, they said that the attraction would be able to pay for its operations using donations and tickets sales, which cost $12 for most adults.

Some are hoping for an attendance boost from a new highway interchange that recently opened closer to its entrance. The Archway museum’s annual attendance—roughly 60,000 visitors—has declined every year since it opened, according to museum officials.

The court didn’t even hold a hearing on the plan because no one objected—not even bondholders who had the power to argue for a reorganization strategy that might increase their payout.

But in this case, the museum’s investors were told that they didn’t have much choice. If the museum closed down and bondholders foreclosed on the museum, they’d have to pay for demolition expenses that could amount to $10 million, according to the bank that handled the bonds.

Alternatively, investors would have had to pay to insure and maintain the building if they decided to look for a buyer.

Investors who extended some $60 million in municipal bonds for the museum’s construction money have only received a few payments over the years, according to a museum official. Most of its construction debt was forgiven after negotiations that took place several years after the museum opened.

The museum, which is located about 130 miles west of Lincoln, has historical artifacts and volunteer re-enactors who chronicle how pioneers braved the Great Platte River Road in the mid-1800s to settle the country’s prairie land. The structure was designed to look like a covered bridge and is painted sunset-inspired hues of red and yellow.

The museum’s bonds were issued by the 30,000-resident city of Kearney in 1998 and then extended to the foundation that runs it. Officials who put the bond deal together projected that the museum would need about 300,000 visitors a year for it to operate comfortably.

The foundation board’s chairman told Bankruptcy Beat that some people questioned the wisdom of the project from the start and that many of the bonds were not sold locally.

The museum’s foundation put its operations under Chapter 11 protection in March.

Write to Katy Stech at [email protected]. Follow her on Twitter at @KatyStech.