The Associated Press
LOUISVILLE - The Louisville Orchestra will file for bankruptcy protection while it reorganizes in an effort to keep the orchestra afloat.
General manager Michael Beattie said Tuesday afternoon that the orchestra had not yet filed in U.S. Bankruptcy Court. It was unclear when the filing would be made.
"We have not opted for a slow death, which is our situation now," board President Manning G. Warren said. "We have not opted for a quick death under Chapter 7, which would mean closing the doors and giving up. Instead, we have opted for a cure, through a reorganization under the bankruptcy laws."
The board voted unanimously Monday to file for Chapter 11 protection, saying it's the only way "to ensure the future of the orchestra as the cornerstone of Louisville's arts community."
The decision was reached during a 90-minute board meeting, held with the orchestra out of cash and unable to pay either its creditors or its musicians, conductors and administrative staff.
Under Chapter 11, the orchestra gains an immediate freeze on collection attempts by its creditors and has 120 days to submit a reorganization plan to a U.S. Bankruptcy Court judge. Employees are still owed their May 30 paychecks, with the next payroll coming due Sunday. Additionally, a total of $1.3 million in loans is past due to Fifth Third Bank and U.S. Bank.
"We are projecting that that debt will double during the next two years without reduction of our expense," Warren said.
The orchestra also owes approximately $250,000 to various vendors, Warren said.
The board has been grappling with its players over compensation cuts, extending over the next two years, that the board says must be made if the orchestra is to survive. Musicians' compensation accounts for 50 percent of the orchestra's overall expenses, Warren said.
Late last month the players rejected a board proposal that would cut two weeks from the current 42-week season, leave three of 71 full-time positions unfilled and make them give up raises called for in a contract that runs through Aug. 31, 2005.
If the orchestra is able to craft a balanced budget, the Fund for the Arts has pledged $1 million in supplemental aid over that period.
Tim Zavadil, a clarinetist who is the musicians' spokesman, said Monday that "we are in consultation with our attorney to see what our position is in terms of (a) Chapter 11 bankruptcy filing." He added that the players "remain hopeful that there are other solutions that will not involve bankruptcy or pay cuts. We still believe the best solution is to raise more revenue."
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