Another artistic organization is seeking the protection of bankruptcy. The Philadelphia Orchestra Association is the first major symphonic orchestra to file bankruptcy in this country; but it’s not the first arts organization to seek the help of bankruptcy to restructure its debts. The orchestra has cited the costs of maintaining retired musicians and the costs of an annual series of concerts which will cost it $600,000 each year. But the orchestra insists that despite its financial troubles it doesn’t expect to cancel any concerts and have even gone a step further to help its subscribers rest a little easier.
Larry McMichael, an attorney for the association, said the 111-year-old orchestra expects to put on its next regular season, which starts in October. The escrow account was arranged should the orchestra, which says it has a $14 million deficit, issue refunds to its annual subscribers and other ticket buyers, McMichael told U.S. Bankruptcy Judge Eric Frank.
Creating an escrow account for the revenue earned from selling subscriptions is a smart move on the part of the orchestra. And if this latest move is any indication of the arts organization’s bankruptcy savvy, we could see them exiting bankruptcy a much more viable business. One of the challenges that arts organizations may face when filing bankruptcy is the difficulty that their employees, subscribers and even supporters have seeing them as a business and understanding the necessity of bankruptcy. And while an arts organization’s primary goal is to provide artistic enrichment for their community, bankruptcy can help them get a better handle on their organizations finances increasing their chances of surviving in the long-term.
(source: Bloomberg.com )