Management and musicians of the Philadelphia Orchestra Thursday announced a tentative agreement for a new labor contract, but don’t lift a glass of opening-night champagne just yet.
A “host of minor issues” remained to be worked out in the 200-page labor pact, Philadelphia Orchestra Association lawyer Lawrence G. McMichael said in U.S. Bankruptcy Court Thursday.
“The process of getting though the minutiae” is ongoing, and a deal is expected to be in the hands of musicians to consider in the next day or so, McMichael told Judge Eric L. Frank.
The goal is to have a tentative agreement before the orchestra board for a vote Tuesday, with a union ratification vote Wednesday, McMichael said.
The deal then would be submitted to Frank, and subject to his approval, as part of the Association’s plan to exit from bankruptcy.
Not known yesterday was whether a settlement plan would draw objections from creditors or other parties. Chief among those likely to object is the American Federation of Musicians and Employers’ Pension Fund, which has said it intends to pursue litigation if the new musicians’ contract does not retain the fund as the retirement plan for musicians.
Judge Frank asked McMichael whether he expected “issues with the pension fund.”
McMichael declined to answer, claiming the tentative agreement as a “confidential settlement” until after it is officially filed with the court as part of a bankruptcy exit plan.
Pension plan lawyers, however, are continuing a legal stance that assumes the plan will have to argue for $23 million to $35 million it estimates it will be owed if the Association pulls out of the plan. Wednesday night it filed a series of motions with the court to procure financial records from 16 orchestra donors, some of whom are members, or have been members, of the board. They may be called as witnesses as part of the discovery process, the fund’s filing states.
These donors gave gifts the fund suspects were classified as restricted, when if fact they are unrestricted and therefore available to creditors.
Among the 16 donors are the Hamilton Family Foundation, several estates, and current and former board members Richard Klein, Michael Zisman and Ronald L. Kaiserman.
The $2 billion pension fund is pursuing the money, in part, because it fears other orchestras nationally will follow the Philadelphia Orchestra’s example and file chapter 11 as a strategy for shedding unwanted obligations.
But there’s an addition reason, the fund told donors in letters explaining the requests: “When an employer, such as the POA, withdraws permanently from the Fund, federal law requires that the employer pays to the Fund its ‘fair share’ of the Fund’s liability for ‘unfunded vested benefits.’”
The potential settlement between the Association and musicians was worked out during mediation with Stephen Raslavich, chief judge of U.S. Bankruptcy Court, Eastern District of Pennsylvania.
“In the end, Raslavich came up with his own [agreement] and recommended it to both sides,” McMichael said.
McMichael asked the court for expedited approval.
“This settlement is time sensitive, and we need to move forward at a vigorous clip in order for it to do what it is intended to do.”