The Philadelphia Orchestra's bankruptcy bills have grown by $750,000

Posted: July 27, 2011

A new round of legal and professional bills submitted for court approval adds three-quarters of a million dollars to the Philadelphia Orchestra Association bankruptcy tab.

As of the end of June, the orchestra's Chapter 11 proceeding had produced $2.4 million in expenses and fees to outside firms and consultants, according to filings with U.S. Bankruptcy Court.

With months to go before the case is expected to exit bankruptcy, the cost is closing in on the $2.9 million the association once forecast for the entire process.

"The $2.9 million projection referenced in the most recent draft of the strategic plan reflects only bankruptcy-related professional fees and was based on an estimate of reasonable progress in the case," orchestra spokesman Matt Broscious wrote in an e-mail.

He said, "There are any number of factors that can impact those costs . . . The orchestra does not plan on issuing a revised projection for costs of reorganization until sometime in early fall. With the goal to provide ongoing financial sustainability for the orchestra, the bankruptcy process represents a set of onetime, short-term costs that will help us do that."

The largest invoices to date come from the orchestra's bankruptcy lawyers at Dilworth Paxson L.L.P., whose chairman, Joseph H. Jacovini, is an orchestra board member. Dilworth has so far billed $1.05 million, including work performed in the run-up to the April 16 filing. Its invoice shows billable hours by 12 lawyers and two paralegals.

The firm has an arrangement with the orchestra for payment that no other contractor enjoys, according to the spokesman: The orchestra board has agreed to personally cover all of Dilworth's fees. That "demonstrates their commitment to this organization and its future," said Broscious, a consultant from Brian Communications.

When the court considered whether the Dilworth firm had an actual or potential conflict of interest and should be dismissed from representing the association, Dilworth lawyer Lawrence G. McMichael told the judge that Jacovini had been "walled off" from the case within the firm and had recused himself from all discussions surrounding the bankruptcy.

Dilworth has made a $75,000 charitable donation to the orchestra, McMichael said.

The second-largest invoice comes from Alvarez & Marsal Holdings L.L.C., the association's bankruptcy adviser, with a total of $833,365.

All the firms are requesting interim payments of 80 percent of the professional fees and 100 percent of expenses; under bankruptcy rules, the remaining 20 percent of fees is requested quarterly.

The orchestra association does not count bills from its outside labor attorneys toward its bankruptcy costs, since, Broscious said, those fees would have been incurred regardless of the Chapter 11 filing. The labor attorneys are negotiating a new contract with the musicians, but the status of that agreement has essentially become part of the bankruptcy case.

Therefore, The Inquirer has included $203,616 in labor attorneys' fees in the $2.4 million in bankruptcy costs.

In fact, paperwork from labor attorneys Curley, Hessinger & Johnsrud includes bills for endowment analysis in connection with claims, and advice regarding "communications, strategy, media issues and bankruptcy issues."


Contact music critic Peter Dobrin at 215-854-5611 or pdobrin@phillynews.com. Read his blog, "ArtsWatch," at www.philly.com/artswatch.

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