Philadelphia Orchestra Files For Bankruptcy
PHILADELPHIA (CBS) - The Philadelphia Orchestra has scored another first, but none of its trademark lush notes were sounded. The stage was a courtroom, as it became the first major U.S. orchestra to declare bankruptcy.
Among the big issues hitting sour notes are contract and pension obligations.
Management lawyer Lawrence McMichael says the musicians' pension is underfunded to the tune of $40-50 million.
The lawyer representing the musicians, Bruce Simon, believes it's only $6-8 million. He also believes the orchestra's $140-million endowment could have been tapped to avoid bankruptcy.
"That money can be reached. It's been reached by other institutions," Simon said.
(Steve Tawa:) "So, you're suggesting that the endowment money can be used for operational expenses?"
"In our view, yes," Simon said.
McMichael says they won't be able to raise any money if they "raid endowments."
"It's restricted by a variety of instruments and trusts, all of which are fully valid and enforceable," McMichael said.
The hope is to come up with a bankruptcy-exit plan over the next several months, as it shores up charitable contributions from donors, while reaching out to patrons for ticket and subscription sales.
Reported by Steve Tawa, KYW Newsradio
