Bankruptcy Judge Terminates Philadelphia Orchestra’s Current Pension Plan
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PHILADELPHIA (CBS) – A U.S. bankruptcy judge has given the Philadelphia Orchestra Association permission to terminate its single-employer pension plans. This is another step toward exiting the not very tuneful Chapter 11 process.
Lawrence McMichael, the lawyer representing the Orchestra, says they need to drop the defined benefit plan and move into a 403 (b) defined contribution plan. Company numbers put the musicians’ and staff pensions at a nearly $17 million deficit this past summer with minimum funding requirements at $3 million a year and climbing.
McMichael told the court it would be, “difficult, if not impossible,” to reorganize the storied Orchestra with the current pension in place. He says donations had dried up.
“That presents a risk factor to anybody thinking about making a significant contribution to the orchestra. They don’t want their money dropping into a black hole, never to be seen again. They want it to support the music that we all know and love,” McMichael said.
The orchestra needs to raise about $170 million over five years to get out of bankruptcy, meet operating expenses and boost endowments according to McMichael.
“We need to raise something north of $60 million. We’re halfway there in terms of grants, pledges and challenge grants to date.”
The final hurdle to clear bankruptcy will be working out a new lease arrangement or relationship with the Kimmel Center. Participants would like to exit bankruptcy by mid-April, the one year anniversary of the Chapter 11 filing.
Reported by Steve Tawa, KYW Newsradio 1060