The Please Touch Museum has filed for Chapter 11 bankruptcy, a move spurred by a heavy debt load associated with its 2008 move to a new building.
The museum, whichwill stay open, listed between 200 and 999 creditors and says it owed them somewhere between $50 million and $100 million on assets of $10 million to $50 million.
News of the bankruptcy at the region’s most prominent children’s museum was not surprising.
It borrowed $60 million in 2006 to finance a move from its cramped location near the Ben Franklin Parkway in Center City to it’s spacious new digs in Memorial Hall in Fairmount Park.
The move coincided with the nation’s economic crisis, which museum officials said had made it hard to raise money from donors.
It defaulted on its bond in 2013.
The fight with bondholders led many to fear that creditors would seize some of the museum’s exhibits, Bloomberg reported in a 2014 article on the museum’s financial troubles.
Those exhibitsinclude a room where kids can experiment with pressurized air to shoot rockets into the ceiling, a child-sized hamster wheel and a make-believe supermarket.
Officials at the “Please Touch,” as it is known to kids and parents across the city,say they have reached a deal with those bondholders, who will receive $11 million under the deal.
“Today’s filing puts Please Touch Museum on a path towards even greater success,” said Sally W. Stetson, Chair of the Board of Directors. “To be very clear, the Museum will remain open. We are simply entering into a process to resolve the institution’s debt and position ourselves for lasting growth and sustainability. When the process is complete, the Museum will be on stable financial ground, have a strong foundation for the future and offer expanded programming.”
RELATED: Turning found objects into art
Bankrtuptcy lawyer Lawrence McMicheal said the museum still owes about $59 million on the outstanding debt. He believes that holders of about half of the museum’s debt have agreed to the haircut.
In most recent trades, the museum’s debt was trading at 14 cents on the dollar.
Museum officials say investors are likely to receive more than they would have in a contested bankruptcy.
The bankruptcy filing made on Friday did not list the museum’s creditors, nor did it spell out exactly how much they were owed.
In a statement, the museum says it can bring in 85 percent of its expenses through admissions, and it believes it can raise the remaining 15 percent through donation.
The Please Touch Museum, which opened 37 years ago in a row house, encourages children to learn through play. It attracts 500,000 visitors each year.
The bankruptcy, said CEO Lynn McMaster won’t be noticed by visitors.
“It’s business as normal,” McMaster said, “They’ll see some exciting new stuff.”