Also not listed in the assets total is the $120 million in 18 endowment accounts held by the orchestra. The association contends that this money was restricted by donors, with the principal meant to remain untouched in perpetuity.
The orchestra's April 16 bankruptcy petition is in part about immediate cash-flow issues, but a central goal is replacing the defined-benefit pension plan for musicians with a defined-contribution plan.
Orchestra leaders have said bankruptcy is a tool to renegotiate compensation, work rules, and pension benefits with musicians; its contract with the Kimmel Center; a separation from Peter Nero and the Philly Pops; and a change in terms with a number of other partners.
Talks between management and musicians continue next week under the guidance of George H. Cohen, director of the Federal Mediation and Conciliation Service.
The assets listed by the orchestra as of April 15 are a combination of liquid and nonliquid assets: $3.4 million in checking, savings and other accounts; two condominiums; $6 million in accounts and pledges receivable; and musical instruments worth an estimated $3.9 million.
Orchestra leaders have said for more than a year that the group was about to run out of cash, though periodically moving the predicted date forward.
Wednesday's announcement of a package of gifts from area philanthropists toward a $160 million plan will keep the orchestra liquid through the middle of August, said McMichael, and additional anticipated pledges may stretch that through opening night on Oct. 13.
The gifts, as is the usual practice, are coming in on payment schedules. For instance, a $5 million promise from board chairman Richard B. Worley and his wife, Leslie Anne Miller, is being paid at $1 million a year for five years.
The orchestra is arranging debtor-in-possession financing, a special form of financing for organizations in Chapter 11 - "maybe a $3 million line of credit to help us bridge cash-flow issues," McMichael said. "It gives us a safety net."
The risks undertaken by the association in filing for bankruptcy are substantial. Leaders acknowledge that the court may compel the association to meet its financial obligations to the pension by tapping the endowment. A smaller endowment means less investment income each quarter, which means less support for the orchestra's operating budget.
Another risk is that the bankruptcy filing jeopardizes a major portion of the endowment. In its donor agreement for a $50 million gift, the Annenberg Foundation asserted its right to ask for the money back if the orchestra filed for bankruptcy. An Annenberg official has said the foundation is monitoring the situation.
The orchestra's statement of assets and liabilities provides a rare detailed view of the orchestra's finances and, by extension, its operations.
For the 90 days before filing for bankruptcy, the orchestra listed payments to piano movers, photographers, marketing and fund-raising consultants, printers and caterers, lawyers and publishers, and widows of orchestra musicians.
Among the significant items:
The association paid its chief executive, Allison B. Vulgamore, $88,000 to cover expenses associated with her move from Atlanta to Philadelphia.
Some fees associated with research into and preparation for the bankruptcy were detailed, including $428,945 paid to Dilworth Paxson between October and April (the law firm donated $75,000 to the orchestra in January, McMichael said); $432,055 to bankruptcy consultant Alvarez and Marsal; and an April 15 payment of $60,000 to Brian Public Relations, headed by Brian P. Tierney.
The orchestra edited out information relating to payments to guest artists, since, the orchestra claims, "Making this information available to the debtors' competitors and to the public will have a significant adverse impact on the debtors' ability to attract and retain highly skilled talent."
McMichael said the $88,000 to Vulgamore covered more than moving expenses. "Under Allison's contract, the orchestra committed to reimburse her for a number of different costs associated with moving her from Atlanta to Philadelphia. She had to sell her house in Atlanta and buy a house, there were closing costs and transaction costs, temporary housing, certain transportation expenses, a very long list of things. Some reimbursables were subject to taxes, so to make them tax-neutral they were grossed up." To "gross up" means to increase an amount paid to cover taxes expected as a result of the income, thereby removing tax implications.
Of the $704,000 in creditors' claims as of April 16, the orchestra lists $22,000 to the Doubletree Hotel; expense reimbursements to its own employees; $169,000 to the Kimmel Center; $9,500 to the Mann Center; $45,000 to SpectiCast; $18,000 to Nicholas Platt, the former U.S. ambassador retained by the orchestra to help arrange its planned residency in China; and undetermined amounts the orchestra owes to its underfunded staff and musicians' pension plans.
Contact music critic Peter Dobrin at email@example.com or 215-854-5611. Read his blog, "ArtsWatch," at www.philly.com/artswatch.