Over a year ago in April 2011, the Philadelphia Orchestra filed for bankruptcy. As one of the most venerable and renowned musical organizations in the United States, this shocked the world. Last Thursday, the Fabulous Philadelphians laid out a plan to emerge from Chapter 11 bankruptcy and resume play by July 31, 2012.
Reorganization plan details
Some of the details of the reorganization include the:
- Renegotiated collective bargaining agreement with musicians to reduce salaries and benefits
- Transfer of unfunded pension liabilities to the Pension Benefit Guaranty Corporation
- Reduction of pensions for seven retired musicians
- Payoff of unsecured creditors
- Past rent payment to the Kimmel Center
- Resolution of financial disagreements with Peter Nero and the Philly Pops
Now that the plan is on paper, it will be reviewed by Philadelphia-based U.S. Bankruptcy Court judge Eric L. Frank.
About the type of bankruptcy filed by the Philly Orchestra
The Philadelphia Orchestra filed what is known as a Chapter 11 bankruptcy, which is a relatively rare form of bankruptcy not often filed by Athens, GA bankruptcy lawyers. It is primarily used by organizations as a temporary measure to renegotiate contracts, make deals and present a plan for moving forward to keep the business alive. This type of bankruptcy may also be taken by individuals.
Chapter 11 bankruptcies typically take a lot of time, but they don’t leave as much of a negative mark on one’s credit or financial standing. They are also one of the few bankruptcies available to business organizations.
The future of the fabulous Phils
Despite the plan for reorganization, a New York Times report suggests that difficult times still lie ahead for the Philadelphia Orchestra.
The reorganization calls for a $9.5 million deficit for the 2013 – 2014 season. The orchestra will not have a balanced budget until 2018 even if it meets optimistic ticket sales and fundraising goals. Prior to the Chapter 11 filing, the Philly Orchestra’s annual deficit had reached $14.5 million.