Philadelphia Orchestra gets approval to exit bankruptcy

Posted on: June 29, 2012

In Friday’s (6/29) Philadelphia Inquirer, Peter Dobrin reports, “After becoming the first major U.S. orchestra to file Chapter 11 14½ months ago, the Philadelphia Orchestra Association is leaving bankruptcy. On Thursday U.S. Bankruptcy Court Judge Eric L. Frank approved the orchestra’s reorganization plan, which drew no opposition at a hearing attended by most of the major interested parties. His action clears the way for full emergence from bankruptcy by the end of July. About $5.5 million will be distributed to creditors based on a sliding-scale formula. The April 16, 2011, bankruptcy petition sought rent relief from the Kimmel Center and lower musician labor and pension costs … Though expenses were outpacing income by a substantial amount, the bankruptcy route was not taken in response to mounting unpaid bills. Rather, the association used the maneuver as a ‘hammer,’ in [orchestra lawyer Lawrence G.] McMichael’s words, to extract a 20-percent pay cut from musicians; to get a break in rent for Verizon Hall; to shift preexisting pension burdens to the federal agency that insures defined-benefit plans; and to jettison a merger-in-process with the Encore Series, Inc., which operates the Philly Pops. The process took longer than expected—and professional fees, at just under $10 million, were triple the forecast—but the orchestra achieved its major objectives.”

Posted June 29, 2012

 

Philadelphia Orchestra photo by Ryan Donnell