Philadelphia Orchestra Emerges from Bankruptcy
Tuesday, July 31, 2012 - 01:15 PM
The Philadelphia Orchestra emerged from 15 months of Chapter 11 bankruptcy protection Tuesday after a federal judge approved its reorganization plan. The protracted and controversial reorganization saw the orchestra reach a new labor deal with musicians, end a planned merger with the Philly Pops, and reach rent concessions from its landlord at the Kimmel Center.
U.S. Bankruptcy Court Judge Eric L. Frank approved the plan at a hearing on June 28 but the process of cutting checks and other administrative matters took another month to finish.
The orchestra declared Ch. 11 in April 2011, blaming its financial troubles on a poor economy, declining ticket sales and reduced gifts from donors.
Through its reorganization, the orchestra said it addressed more than $100 million in claims, debts and liabilities with a settlement of $5.49 million. Of that total, $4.25 million will be paid to creditors immediately, with the rest on a sliding-scale formula.
As part of the settlement, the orchestra has revised its agreement with the Annenberg Foundation, its largest donor, whose contributions account for half the orchestra's endowment. The philanthropy will now have greater powers of oversight and control over how investment income from its gift is spent.
While many U.S. orchestras have faced financial troubles in recent years, the Philadelphia Orchestra is the first major ensemble to declare bankruptcy. The Philadelphia Inquirer reports that it now faces almost $10 million in fees and expenses as a result of Ch. 11. A new music director, Yannick Nézet-Séguin, arrives in October and will bring the orchestra to Carnegie Hall on Oct. 23.