July 17, 2012
By: Chris Kramer
After making history by becoming the first major U.S. orchestra to file for bankruptcy, the Philadelphia Orchestra Association is wrapping up its bankruptcy process after more than a year in court, according to a report from the Philadelphia Inquirer.
Last week, U.S. Bankruptcy Court Judge Eric Frank granted his seal of approval to a reorganization plan that would allow the orchestra to exit bankruptcy court by the end of this month.
As part of the bankruptcy plan, which was reached after nearly 15 months of negotiations with several creditors, the court will distribute roughly $5.5 million to creditors based on their seniority.
And sources say the plan faces no significant opposition from the group’s lenders. Sources are optimistic that the agreement will allow the orchestra to continue its operations. In Judge Frank’s opinion, the orchestra’s collapse would have been "a great loss for Philadelphia, the region, and the music world."
The judge also noted that the orchestra "is an important cultural and civic institution," and he expressed his hope that the restructured debt payment plan would allow the orchestra to "continue to perform for audiences for many years to come."
In a fitting end to the group’s long trek through bankruptcy court, when the judge announced the completion of the bankruptcy, the orchestra’s attorney led board members and musicians in a hearty, rhythmic round of applause.
The communal round of applause was a cordial end to what sources say was a very contentious process, as the board of directors for the orchestra sought serious concessions from musicians in order to solve the debt crisis.
According to the Philadelphia Inquirer, during bankruptcy, the orchestra negotiated a 20 percent pay cut from musicians, reduced its future pension obligations, and secured a more favorable lease from the owner of its primary venue, Verizon Hall.
And while the bankruptcy process reportedly took a bit longer than the orchestra expected, and led to the accumulation of almost $10 million in fees, the orchestra managed to achieve it primary objectives, sources say.
In the words of orchestra chairman Richard Worley, the bankruptcy filing amounted to "an incredible effort on the part of many" members of the orchestra’s extended family.
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