Bloomberg News

Philadelphia Orchestra’s Pension Fund Seeks Donations Probe

October 05, 2011

(Updates with background beginning in fifth paragraph.)

Oct. 5 (Bloomberg) -- The Philadelphia Orchestra’s pension fund asked a bankruptcy judge to allow it to gather details of some donations made to the orchestra.

The American Federation of Musicians and Employers’ Pension Fund requested information from the donors to “confirm whether additional funds are available to satisfy the fund’s claim,” according to a filing today in U.S. Bankruptcy Court in Philadelphia.

The fund said it was forced to seek a remedy in court after some requests for “informal discovery” weren’t answered by the donors. Lawyers for the fund filed more than a dozen separate motions seeking information from individual donors, according to court filings today.

The orchestra, which has premiered works by Stravinsky, Mahler and Rachmaninoff and recorded the accompaniment for dancing mushrooms and hippos in Walt Disney Co.’s animated “Fantasia,” filed for bankruptcy protection in April in Philadelphia.

Philadelphia Orchestra Association has “repeatedly indicated that it intends to withdraw from the AFM Plan,” the fund said in court papers. Lawyers for the fund estimate the withdrawal liability at about $35 million, making the fund the orchestra’s largest creditor, according to court filings.

Labor Contract

The bankruptcy filing was partly blamed on the high cost of the musicians’ pensions. The orchestra also said it needed to renegotiate the musicians’ labor contract. The Chapter 11 petition in April said assets and debt were both less than $50 million.

The orchestra had endowments valued at $116 million as of Feb. 28, Philadelphia Orchestra Association Chairman Richard B. Worley, said in court papers filed April 17. The orchestra isn’t permitted to spend the funds on general operating expenses because these are restricted to specific uses, such as musician salaries and education, he said.

The case is In re The Philadelphia Orchestra Association, 11-13098, U.S. Bankruptcy Court, Eastern District of Pennsylvania (Philadelphia).

--With assistance from Phil Milford and Steven Church in Wilmington, Delaware. Editors: Andrew Dunn, Michael Hytha

To contact the reporter on this story: Dawn McCarty in Wilmington at dmccarty@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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