D espite two stark facts—$140,000,000 in its endowment and no significant debts—the Philadelphia Orchestra Association (POA) filed for Chapter 11 bankruptcy protection on April 16, 2011. POA board chair Richard Worley claims that various “contractual entanglements threaten our existence.”
What the POA seeks was listed in a declaration in support of first-day motions by Worley: “The debtors seek in the Chapter 11 process to achieve the following outcomes: (1) relief from pension obligations, (2) relief from current contractual obligations to Peter Nero [and the Philly Pops] and others, (3) renegotiated contractual agreements with KCI [the concert hall], (4) a new collective bargaining agreement with Local 77 [the musicians], and (5) a court-approved plan with all these elements that will attract donor support.”
Without doubt, the Philadelphia Orchestra does have significant financial troubles. We have been running deficits for the past couple seasons. Ticket sales are down, donations of all kinds are down, and the stock market crash of 2008–2009 is still being felt in a reduced draw from the endowment. But those are all cash flow issues— problems that could be corrected through better marketing to sell more tickets and improved fund-raising. Bloomberg’s bankruptcy specialist compared the bankruptcy filing to “using a nuclear weapon to eradicate an infestation of fire ants.”
We first heard the “B word” in a newspaper interview with Worley and POA President Allison Vulgamore in January 2010. That caused an initial flurry of calls from POA business partners demanding immediate payment on all bills due. The musicians and community were both incredulous and horrified. POA leadership thankfully stopped talking about that for the next several months.
Bargaining for a new CBA began in October 2010. We were told that the Orchestra would run out of cash by November 30, 2010. That day came and went. Then we were told that unless we reached a new, concessionary CBA by the end of January, they would file for bankruptcy in February. That prediction was wrong, too. As the Orchestra’s assets far exceeded its liabilities we took this threat to be a hardball negotiating tactic. Negotiations and doomsday predictions continued, but management had “cried wolf” so many times that it was impossible to separate fact from fiction.
Upon the recommendation of our negotiating attorney, Susan Martin, and with the help of Local 77 President Joe Parente, we consulted and eventually engaged bankruptcy counsel Bruce Simon of Cohen, Weiss and Simon LLP in New York. With his help, we determined that the POA’s threats of bankruptcy, while seemingly idiotic, were becoming more real. We began to understand that their lawyers believed they could get out of contracts and pension obligations through Chapter 11 reorganization and any argument we made would fall on deaf ears.
Worley and Vulgamore asked to meet with the full orchestra on Sunday, April 10. Worley announced, “I expect a bankruptcy vote by the full board at a meeting this Saturday [April 16], and I expect it to pass.” The musicians urged a public fund raising campaign, but the suggestion was not accepted.
It is now apparent that the court papers had already been prepared. Borrowing an idea from the Cleveland Orchestra, the musicians staged well-received leafleting exercises in the following days by leaving the stage just before concerts to give the audience information and ask them to e-mail Worley and Vulgamore to oppose the bankruptcy. And the full orchestra mounted a peaceful protest outside the law office where the infamous meeting was held. A brass group played outside on that chilly morning and a string quartet greeted arriving board members in the lobby. We learned that afternoon that the bankruptcy vote passed overwhelmingly despite passionate speeches and “No” votes from the five musicians on the board. Bankruptcy papers were filed electronically with the court that afternoon.
The case is working its way through the court system. Our attorneys estimate it will take 6 to 18 months to complete. POA has estimated their court costs at a staggering $8 million to $10 million—more than enough to bridge the gap between our contract proposals. Their lead attorney is running up a tab at $750 per hour with several assistants at about $400 per hour. It’s galling that the POA is willing to pay millions to attorneys but not willing to pay its obligations to the musicians. We’re also told that bankruptcies are essentially impossible to predict because our lives, as well as the Association’s, are now in the hands of a third party, the judge. We are proceeding one step at a time.