Titanic Collection Stays Afloat Despite Bankrupt Parent Company

One artifacts of the RMS Titanic featured in "Titanic: the Artifact Exhibition." (Courtesy photo: Premier Exhibitions)

While it's no consolation for the original passengers, it’s clear sailing now for the massive collection of 5,500 artifacts salvaged from the Titantic, ranging from a piece of the ship’s hull to the contents of passengers’ luggage.

The collection and rights to the shipwreck excavation site were set to be sold in a bankruptcy auction Oct. 11 at Troutman Sanders' Atlanta headquarters, but the auction sank for a lack of qualified bidders.

Instead, a consortium of three hedge funds—the designated stalking-horse purchaser if the auction didn’t go through—has bought the assets of Premier Exhibitions, which through its subsidiary RMS Titanic owns the Titanic collection and salvage rights, for $19.5 million as part of the exhibition company’s bankruptcy proceedings.

Troutman is bankruptcy counsel for RMS Titanic, while Nelson Mullins Riley & Scarborough represents Premier.

Atlanta-based Premier operates a traveling Titanic exhibit, along with "Bodies: The Exhibition" and "Xtreme BUGS!" The hedge funds—Apollo Global Management, Alta Fundamental Advisers and PacBridge Capital Partners—will continue operating Premier as a “going concern,” said Marshall Glade, a managing director for GlassRatner Advisory & Capital Group, Premier’s financial adviser for the bankruptcy.

Premier’s roughly 100 employees will keep their jobs, and the Titanic artifacts will stay intact, Glade said, making the sale a “really positive outcome.” The $19.5 million purchase price gives Premier’s unsecured creditors an 80 percent recovery, he added.

“The exhibit will continue to tell the tragic story of the Titanic for the time to come,” he said.

That should quell the fears of TitanicNewsChannel.com’s proprietor, Mark Taylor, who had worried in blog posts that the collection would be broken up or sold to Chinese investors for a Titanic theme park in China where a full-scale replica of the ship is being built.

The equity committee for a determined group of minority shareholders had contested the sale to the hedge funds, claiming it was an “insider deal, but Judge Paul Glenn of the U.S. Bankruptcy Court for the Middle District of Florida approved it Oct. 18.

The U.S. government, the National Oceanic and Atmospheric Administration, the U.K.’s National Maritime Museum, and UNESCO’s Division for Heritage, have also weighed in on the Titanic’s bankruptcy sale, via filings in RMS Titanic’s separate salvor-in-possession case in the U.S. District Court for the Eastern District of Virginia.

The National Maritime Museum also opposed the sale, claiming in a filing in RMS Titanic’s salvor-in-possession case in U.S. District Court for the Eastern District of Virginia that the company was trying to sell itself to “statutory insiders.”

The auction was not for the casual souvenir hunter. Premier required a minimum bid of $21.5 million for prospective buyers to participate, along with a 10 percent cash deposit to show they were serious.

But the exhibition company canceled the auction after it received no qualified bids before its Oct. 5 bid deadline, according to bankruptcy filings. The National Maritime Museum with a consortium of British museums had earlier made a bid for $19.2 million, but it did not meet the auction bid conditions.

No Break-Up

Some observers have wondered why the Titanic collection was not broken apart and sold to the general public to fetch a higher price.

There is an appetite for individual Titanic items. Artifacts retrieved by survivors, separate from the RMS Titanic collection, have sold for big bucks, including a violin recovered from the body of the ship’s bank leader, which went for $1.4 million, and a fur coat donned by a crew member that brought $235,000. A cracker from a survival kit sold for $23,000.

The collection has been appraised at almost $200 million, noted Amanda Rottermund of Withers, which handles art and memorabilia collections.

“The Titanic artifacts are memorabilia,” Rottermund said. “Why not have a sale in a more traditional auction way? Break up the lots and sell them at Christies, Sotheby’s or Bonhams, and let the public take home a piece,” she asked, adding that the IP and salvage rights could be sold separately.

But RMS Titanic must keep the artifacts, the IP rights and its exploration rights to the shipwreck site together as a condition of its status as salvor-in-possession.

The same condition would apply to any buyer, which may have narrowed the field for prospective auction bidders.

That condition has been in place since 1994, when a federal judge for U.S. District Court for the Eastern District of Virginia made RMS Titanic the salvor-in-possession, under the condition that it maintain the artifacts collection properly, allow research and public access and protect the shipwreck site.

That included fending off a tour operator's plan earlier this year to take tourists on wreck dives for $100,000 apiece and create a 3-D virtual model of the wreck using sonar, laser and video.

The company also agreed to continued oversight by the court. Any exploration or salvage expedition must receive approval from NOAA and the court.