Philadelphia Orchestra Association exits bankruptcy
The Philadelphia Orchestra Association is out of bankruptcy.
Philadelphia Orchestra Association exits bankruptcy
Peter Dobrin, Inquirer Classical Music Critic
The Philadelphia Orchestra Association is out of bankruptcy.
U.S. Bankruptcy Judge Eric L. Frank approved the association’s reorganization plan June 28, but with the writing of checks and completion of other administrative matters Monday and Tuesday, the curtain officially has come down on perhaps the most perilous episode in the history of the organization that supports and presents the storied ensemble.
“I feel like I’m getting out of jail,” said orchestra chairman Richard B. Worley. “There were times when it seemed overwhelming and fraught with danger. But the constituents within the institution, the musicians and staff, made adjustments, contributions. The Kimmel Center was enormously supportive and helpful. And many Philadelphians came to our aid. I am both proud and grateful to all those who helped save this wonderful living, breathing treasure. There is still a lot of work to do. But we accomplished what we could, and that was a lot.”
Asked whether he still thought bankruptcy was the right route, he said, “I do. Emphatically. I understand there are others who would disagree with that assessment. It’s over and done. And I hope the community will rally around the orchestra. I think it’s a time of great opportunity.”
When it filed its April, 2011, Chapter 11 petition, the Philadelphia Orchestra became the first major U.S. orchestra to declare bankruptcy. The case took longer (15½ months), and was more expensive (almost $10 million in professional fees and expenses) than expected.
The association succeeded in most of what it set out to do, though the action was not without substantial risk and high costs. A new, deeply concessionary labor deal with musicians was reached despite the threat of a strike. Several musicians have left or are planning to leave for other jobs.
The association was able to withdraw from a national musicians’ pension fund and shift its burden to the federal agency that insures pensions by negotiating a $1.75 million settlement with the pension fund, thus avoiding potentially lengthy litigation.
A merger-in-process with the Philly Pops was ended after a $1.25 million settlement payment from the association to the Pops was agreed upon.
Talks with the Kimmel Center produced rent concessions for the orchestra’s use of Verizon Hall.
Bankruptcy triggered a revamped contract with the Annenberg Foundation giving the philanthropy greater oversight and control over how investment income from its $50 million gift is spent. The money is being moved from the orchestra endowment into an account at Northern Trust.
Although the bankruptcy — official as of Monday — is now behind the association, a few issues linger.
The mechanics of separating the Annenberg money from the orchestra’s and transferring it is taking longer than expected, so the association Monday filed a motion to extend to Aug. 31, the time for implementing the new agreement.
“These are invested funds, and some are complicated and some overlap with other parts of the orchestra’s endowment,” said orchestra lawyer Lawrence G. McMichael. “Some are nontransferable by their nature. This is quite a list of complications we’re dealing with.”
Litigation continues against a South Korean presenter that failed to make good on payments for two concerts in April 2010, at Sungsan Art Hall in Changwon and Gumi Culture & Art Center in Gumi. Of $200,000, only $20,000 has been paid.
In addition, a Sept. 24 hearing will consider some of the 85 claims by creditors being contested by the association. “Many of these claims have in fact been paid [as in the case of some guest artists] or are duplicates,” said McMichael, who expects many to be resolved before the hearing date. Several were made by subscribers for tickets to concerts that in fact happened, so they are not entitled to a payment, McMichael said; some are for claim amounts that differ from those in the association’s records.
At the June hearing approving its reorganization plan, Frank said: “The orchestra is an important cultural and civic institution, and any Chapter 11 case comes with the risk of failure. Had that occurred, it would have been a great loss for Philadelphia, the region, and the music world.”
He expressed his hope that the reorganization would allow put the orchestra to “continue to perform for audiences for many years to come.”
Has any other major foundation ever segregated a gift in a similar way after the fact? They have basically removed it from POA direct control. Is this so that if there were to be a future banruptcy, the Annenberg gift would not be in jeopardized? Or do they simply not trust POA? I understand the Annenberg position but find the precedent as disturbing as the damage done to other American orchestras by the POA withdrawal from a fund to which they were a rather recent addition. The most constructive thing that could happen now is for all the architects of the bankruptcy to fall on their sword to allow some faces to join the POA Board.— ledoyen- make that NEW faces!— ledoyen
- The Orchestra Board and all senior management should resign or be fired. It is a catastrophy that the venerable Philadelphia Orchestra is now a laughing stock.— BobSG
- The dopes running the Orchestra have scheduled Rolando Villazon to sing in the Verdi Requiem. Anyone who knows opera knows that Villazon has lost his voice. They have turned what looked like a big musical event for Philadelphia into a fiasco in the making. Just one of many examples of why the board and management should be fired.— passavant
- wow...$10m for the bankruptcy.... the lawyers and consultants made out great!!— pennyrobinson
- I don't think it is uncommon for donors to control their funds via other management groups. For example, you could specify all your earnings be given to Orchestra A for a particular use. If Orchestra A closes, your money goes to Orchestra B, C, D, etc.. Such an arrangement allows your gift to benefit a particular interest (orchestral music, art museums, etc.) without the risk of your money being lost if your first choice ceases to exist or changes their focus from your original intent.— zanchuk22
- An arrogant group of musicians, a pack of nitwits for board members, and programs that read and sound like a basic music appreciation course! Add on the years of irresponsible programming of terrible new music and commissions handed out by that lack-luster academic Richard Wernick and the subscribers running for the exit??? Well anyone with brains can see the problem!
— RobJackson - This story is a long way from conclusion. Either restore the Orchestra to it's position of importance or accept that it is just another 2nd or third tier 3nsemble, in which case you might as well go part-time.
The "arrogant" musicians earn their money. They are better at their craft than any of you are at anything you will ever do.— altekakker - It's good this chapter has finally come to an end. Was it worth the cost and pain, I'm not so sure. I think steps could have been taken before filing that were not explored and there were individuals who were dead set on annulling the players' pensions at any price. But that is all water under the bridge now. What I will be looking forward to is if the board has the will now that it has gotten its way in bankruptcy to raise the amount of money on an annual basis to keep this orchestra great. The best talent naturally goes where it is best rewarded, so if the POA cannot generate the amount of charitable giving going forward to get back to paying its players what their peers are receiving elsewhere, our top musicians will trickle out until we are in fact left with a much reduced orchestra. Hopefully that never happens.— CoolZanna
Peter Dobrin is a classical music critic and culture writer for The Inquirer. Since 1989, he has written music reviews, features, news and commentary for the paper, covering such topics as the Philadelphia Museum of Art at the Venice Biennale, expansion of the Curtis Institute of Music, the Philadelphia Orchestra's bankruptcy declaration in 2011, Philadelphia's evolving performing arts center and the general health of arts and culture.
Dobrin was a French horn player. He earned an undergraduate degree in performance from the University of Miami, and received a master's degree in music criticism from the Peabody Institute of the Johns Hopkins University, where he studied with Elliott Galkin. He has no time to practice today.
