Speculators Say Philly Forecast Dim

“bankruptcy court is no place to be to simply
ponder the future, or one’s navel” (Mark Shwartz)

by: Colin Oettle

Mark Schwartz is a lawyer who believes The Philadelphia Orchestra’s “plodding” bankruptcy court proceedings don’t bode well for the organization. In an article for philly.com, he compares the orchestra’s situation to that of the Barnes Foundation—a case in which he blames a misguided board of directors for prematurely forcing its organization into court. Barnes is an educational art and horticultural institution that sought court approval to move from a suburb of Philadelphia to a more city-accessible site under the pretense of financial hardship. The move would directly violate the organization’s “indenture of trust,” which stipulates its art holdings are not to be relocated.

Schwartz’s criticism is that Barnes claimed an inability to raise $1.5 million for annual costs, but mustered $150 million once the relocation of the gallery was approved. Fearing the Philly Orchestra may be guilty of something similar, Schwartz points out that bankruptcy court is not somewhere organizations should seek to be. Short of a quick in-and-out to “shed obligations and return to business,” prolonged litigation could threaten the orchestra’s stability as well as its reputation. Players are rumored to be coursing the job market for more stable positions, and subscribers share in the frustration of their orchestra’s turmoil. Who is really benefiting when a near-bankrupt orchestra spends hundreds of thousands on legal fees?

Peter Dobrin, Inquirer Music Critic, outlines the issue in black and white. The administration claims the orchestra cannot afford its current financial obligations, which include commitments to the musicians, their pensions, and the Kimmel Center. The board then filed for chapter 11 protection in an attempt to eliminate these obligations, despite holding $140 million in endowments. The court will decide whether any or all of that money can be used to pay off the obligations, or if being “donor-restricted” truly puts the money off limits as the board argues.

Meanwhile, the musicians who make up the world-class orchestra feel scorned. Cellist John Koen wrote an op-ed detailing the players’ contempt for the board’s bankruptcy filing. He says that the players are not responsible for marketing or fundraising—though they help with both—and that they should not suffer for the unaffordable leases signed by the board. Given the high costs associated with the filing, orchestra members wonder if the board isn’t simply attempting to abdicate from contractual obligations it doesn’t like—including pensions. Either way, a looming question still remains, and that is whether the move will cost the orchestra more in its tarnished reputation than it will save in dollars.

See also:
For the Orchestra, Bankruptcy Symphony is a Downer, by Mark D. Shwartz
Bankruptcy Court hears opening statements on Philadelphia Orchestra’s Chapter 11 petition, by Peter Dobrin
Can bankruptcy fix orchestra? No: It damages its reputation, by John Koen



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