Lawyers study Phila. Orchestra Association e-mails to see if some of endowment can be used in bankruptcy

Lawyers for the American Federation of Musicians and Employers' Pension Fund are combing through more than 50,000 e-mails from computer servers of the Philadelphia Orchestra Association, lawyers told U.S. Bankruptcy Judge Eric L. Frank on Thursday.

E-mails of the orchestra's chief executive and financial officers and of development staff from the last several years were included in the electronic culling.

In court, Frank called the e-mail portion of the discovery process "a daunting task, both in terms of producing it and reviewing it."

Fund officials hope that the e-mail probe, approved by the judge as part of the orchestra's Chapter 11 bankruptcy case, will support their suspicion that a portion of the orchestra's endowment was not earmarked for the endowment by donors, and is therefore available to creditors as part of any bankruptcy settlement plan.

A core aim of the orchestra's bankruptcy is to end participation in the pension plan and shed the financial obligation associated with its withdrawal. The fund says that an estimated $23 million to $35 million tab would be triggered if the association acted on its stated goal of withdrawing from the pension fund.

A source familiar with the documentation of the endowment said that about $20 million of the $120 million endowment appeared to have no paperwork associated with it that spells out donor wishes.

Extracting the e-mails was a "multi-hundred-thousand-dollar project," said association lawyer Lawrence G. McMichael.

Fund attorney Herman L. "Hank" Goldsmith told the court that three professionals were reviewing the e-mails full-time, and that the process was expected to take until the end of the week.

The AFM and Employers' Pension Fund, in which the Philadelphia Orchestra has been a participant, is a national pension plan with about $2 billion in assets. Fearful that the orchestra's bankruptcy will be mimicked by ensembles in other cities if it succeeds, the fund has been an aggressive adversary in the orchestra's bankruptcy case.

But mediation that started Thursday could, at least in theory, render moot the endowment question. In a new tack, players and management are negotiating a labor contract with assistance from Stephen Raslavich, chief judge of U.S. Bankruptcy Court, Eastern District of Pennsylvania.

If the mediation were to result in a deal between players and management in which the current pension plan was kept, fund officials say they would end their probe of the orchestra's endowment and related litigation.

Talks were to resume Friday.

During a break, McMichael said: "Both of the parties and the court are working very hard. Where it's going to go . . . I can't comment on the mediation."