Philadelphia Orchestra management, musicians reach tentative pact

Jean-Yves Thibaudet performing with Philadelphia Orchestra at LucerneFestival, August 27, 2011.
Jean-Yves Thibaudet performing with Philadelphia Orchestra at LucerneFestival, August 27, 2011. (CHRIS LEE)
Posted: October 07, 2011

Management and musicians of the Philadelphia Orchestra announced Thursday a tentative agreement for a new labor contract, but don't lift a glass of opening-night champagne just yet.

A "host of minor issues" remained to be worked out in the 200-page labor pact, Philadelphia Orchestra Association lawyer Lawrence G. McMichael said in U.S. Bankruptcy Court Thursday.

"The process of getting through the minutiae" is ongoing, and a deal is expected to be in the hands of musicians to consider in the next day or so, McMichael told Judge Eric L. Frank.

The goal is to have a tentative agreement before the orchestra board for a vote Tuesday, with a union ratification vote Wednesday, McMichael said.

The deal then would be submitted to Frank, and subject to his approval, as part of the association's plan to exit from bankruptcy.

Not known yesterday was whether a settlement plan would draw objections from creditors or other parties. Chief among those likely to object is the American Federation of Musicians and Employers' Pension Fund, which has said it intends to pursue litigation if the new musicians' contract does not retain the fund as the retirement plan for musicians.

Frank asked McMichael whether he expected "issues with the pension fund."

McMichael declined to answer, claiming the tentative agreement as a "confidential settlement" until after it is officially filed with the court as part of a bankruptcy exit plan.

Pension plan lawyers, however, are continuing a legal stance that assumes the plan will have to argue for $23 million to $35 million it estimates it will be owed if the association pulls out of the plan. On Wednesday night, it filed a series of motions with the court to procure financial records from 16 orchestra donors, some of whom are members, or have been members, of the board. They may be called as witnesses as part of the discovery process, the fund's filing states.

Those donors gave gifts the fund suspects were classified as restricted, when in fact they are unrestricted and therefore available to creditors.

Among the 16 donors are the Hamilton Family Foundation, several estates, and current and former board members Richard Klein, Michael Zisman, and Ronald L. Kaiserman.

The $2 billion pension fund is pursuing the money in part because it fears other orchestras nationally will follow the Philadelphia Orchestra's example and file for Chapter 11 protection as a strategy for shedding unwanted obligations.

But there's an another reason, the fund told donors in letters explaining the requests: "When an employer, such as the POA, withdraws permanently from the fund, federal law requires that the employer pays to the fund its 'fair share' of the fund's liability for 'unfunded vested benefits.' "

The potential settlement between the association and musicians was worked out during mediation with Stephen Raslavich, chief judge of U.S. Bankruptcy Court for the Eastern District of Pennsylvania.

"In the end, Raslavich came up with his own [agreement] and recommended it to both sides," McMichael said.

McMichael asked the court for expedited approval.

"This settlement is time-sensitive, and we need to move forward at a vigorous clip in order for it to do what it is intended to do."


Contact staff writer Peter Dobrin at 215-854-5611 or pdobrin@phillynews.com. Read his blog at http://www.philly.com/artswatch.

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