Philadelphia Orchestra Files Reorganization Plan
Wednesday, May 23, 2012 - 10:00 PM
Thirteen months after it became the first major American orchestra to file for bankruptcy, the Philadelphia Orchestra said Wednesday it has filed a reorganization plan that will bring it out of Chapter 11 by July 31.
With agreements now in place from key creditors, and a renegotiated collective bargaining agreement with its musicians, the orchestra said its blueprint for recovery will be reviewed by United States Bankruptcy Court judge Eric L. Frank in Philadelphia.
This could be a final chapter in a protracted and difficult reorganization process.
The orchestra filed for bankruptcy on April 16, 2011, after it had amassed a yearly operating deficit of $14.5 million on a budget of $46 million. While under court protection from creditors, Philadelphia managers cut about $6 million in annual costs, partly by withdrawing from the musicians' national pension fund (which was transferred to the federally backed Pension Benefit Guaranty Corporation). It also renegotiated the lease on its main venue at the Kimmel Center and dissolved a partnership with Peter Nero and the Philly Pops.
A report in the New York Times suggests a difficult road still lies ahead. A $9.5 million deficit is projected after the 2013-14 season, with a balanced budget by 2018. But that depends on optimistic predictions of ticket sales and fund-raising. The orchestra told the Times that bankruptcy court-related costs were $8.8 million, about half of that consisting of legal fees.