Philadelphia Orchestra Votes for Bankruptcy

Saturday, April 16, 2011

Philadelphia Orchestra Philadelphia Orchestra (Ryan Donnell)

Against the ostinato of a still-fragile economy, the board of the 111-year-old Philadelphia Orchestra voted to file for Chapter 11 bankruptcy on Saturday.

The nearly unanimous vote made the orchestra, whose budget for its 2010-11 season was $46 million, the biggest and arguably most prestigious in the U.S. to file for bankruptcy reorganization.

Concerts and business operations will continue during the bankruptcy proceedings and the Philadelphia Inquirer reports that orchestra leaders are rolling out a $214 million fundraising campaign, their largest and riskiest ever. The orchestra is currently projecting a $5 million deficit.

Musicians were quick to condemn the bankruptcy, which could jeopardize funding to their pensions, among other contract provisions. "This is an entirely unnecessary step because we had given them enough to solve the problem,” said John Koen, a cellist in the orchestra and the head of the players' union. He noted that the musicians had proposed $14 million in concessions that would have sustained the orchestra but which were rejected.

Saturday's voting session lasted nearly three hours and was attended by approximately 40 to 50 board members and five musicians, said Koen. In a show of protest, an orchestra string quartet serenaded board members as they entered the Philadelphia law firm where the vote took place. On Thursday night, the musicians leafleted the hall at the Kimmel Center, the orchestra's primary venue, to express their opposition.

Management has considered bankruptcy since early 2010 after deciding that musicians' current pension fund presents an unsustainable burden. Bankruptcy would give the orchestra "a better chance of raising the investment funds that are needed to revitalize this orchestra over the next five years," board chairman Richard Worley told the New York Times today. It would also allow the orchestra to renegotiate the terms of their lease agreement with the Kimmel Center.

Koen called the orchestra's prediction that bankruptcy will be wrapped up by the end of 2011 "rosy" and said that a more realistic timetable is 12-18 months. During that time, he said that Philadelphia risks losing musicians to other orchestras or academic posts.

The orchestra management was unavailable for comment as of Saturday afternoon.

Last year, the Louisville Symphony filed for Chapter 11, and the symphonies of Honolulu and Syracuse went out of business in recent months. The Detroit Symphony recently emerged from a bruising, six-month strike from which musicians saw their salaries decline by 22 percent.


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Comments [9]

Eileen from New York, NY

Mr Bennett Lane -I agree with you totally. Look at the European countries they nurture their culture, they don't destroy it. But since this country really doesn't care much for culture (look at the fiasco with PBS networks) I am not surprised. I do believe we will see more, we sure can't depend on Uncle Sam - he only helps out big business with our $$$$$$$ Oh, and let pay the athletes more millions!

Apr. 20 2011 06:16 PM
Larry Stoler from Stamford, CT.

Even though this may help the Philadelphia Orchestra in the long run, the fact that they are declaring chapter 11 is a sad development.

I hope things can turn around whether it means reorganization or anything else so that this great orchestra can continue for many years.

Apr. 18 2011 12:22 PM
David from Flushing

This is not the first time the Philadelphia Orchestra has found itself in difficulty. In March 1909, only the intervention of the Mayor of Philadelphia with $15,000 prevented the disbandment of the orchestra just days before the deadline. Apparently the NY Philharmonic was already scouting for players there. The details may be read in a 12 March 1909 article in the New York Times.

Apr. 18 2011 10:11 AM
Kenneth Bennett Lane from BOONTON, NJ

The Scandinavian countries, Germany, and Austria recognize their greatest treasure IS THEIR CULTURE. They would NEVER allow their symphony orchestras, opera companies, museums, and historic landmark buildings being abandoned, undersupported financially or torn down as we have with many birthplace residences of leading writers, composers and political figures.

Apr. 17 2011 11:29 AM
concetta nardone from Elmont, NY

News like this distresses me so. I have so many of their recordings. Wish I had lots of money to help out.

Apr. 17 2011 08:24 AM
Michael Meltzer

Mr. Mitnick:
A 501(c)(3) does not have owners. Under chapter 11, if approved, the assets are at the moment preserved, the doors are open, the orchestra may conduct business, and creditors are enjoined from filing an involuntary bankruptcy against it.
The headline as stated implied "the end." It is not the end, at least not yet.

Apr. 17 2011 08:19 AM

Mr Meltzer-
By what stretch of the imagination do you think that Chapter 11 is not bankruptcy? Even if the organization succeeds in "reorganization", that generally means a re-configuration of ownership to include the bail out contributors and so a loss of control. Chapt 11 is not liquidation (Chapt 7), but it is bankruptcy under the existing laws.

Apr. 17 2011 07:06 AM
Michael Meltzer

Chapter 11 isn't exactly bankruptcy. It is the first step, but there are many, many more chapter 11's than there are follow-throughs. Chapter 11 affords protection against your creditors during a court-supervised reorganization and can buy you the time needed, if there really is a workable plan, to dig your way out of insolvency without going belly-up.
Good luck to them!

Apr. 17 2011 01:26 AM
yichihara from NJ

I was shocked when I learned the news in my car on my way back home in the late afternoon on Saturday, April 16. I don’t remember how many times I heard the radio show host saying “Conductor, Eugene Ormandy, performed by Philadelphia Orchestra …” in Japanese when I was little in Japan. My emotion echoed with David Garland’s sentiment.

Apr. 17 2011 12:05 AM

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