POSTED: 10:22 a.m. HST, Dec 13, 2010
LAST UPDATED: 11:43 a.m. HST, Dec 13, 2010
U.S. Bankruptcy Court Judge Robert Faris approved a request this morning to convert the Honolulu Symphony’s bankruptcy case from Chapter 11 reorganization to Chapter 7 liquidation, effectively ending the 110-year-old Honolulu Symphony.
The Symphony Society had asked that the end date be Dec. 31 for transition purposes, but Faris said he will make it effective as soon as he signs the order.
“There is no transition,” the judge said.
Faris said the latest development was “sad, but not surprising.”
He said he could see no benefit in keeping the symphony in Chapter 11 and it would generate additional expenses.
David Farmer, attorney for the Musicians’ Association of Hawaii Local 677, urged Faris to immediately convert the reorganization to the liquidation proceedings.
“This has been a very bad year,” Farmer said.
He said the symphony leadership “utterly failed in their fiduciary duties.” Despite receiving $200,000 from the symphony foundation, all the money except $62,000 has been spent and “not a note of music was produced,” he said.
He said the symphony board met and voted to convert to Chapter 7 without inviting the two musician members on the panel.
“It goes on and on,” he said. “The bottom line is, ‘Enough’s enough.’ ”
Curtis Ching, the Chapter 11 trustee from the Office of U.S. Trustee, agreed there was no reason to delay the conversion.
Jerrold Guben, the symphony lawyer, asked for the Dec. 31 conversion date, saying administrative expenses has been paid until then. He said the Honolulu Symphony Society would help ensure a “smooth transition.”
Outside of court, Brien Matson, musicians’ association president, said they also felt the conversion should happen immediately. “Why waste any more time,” he said.
Matson was among about a dozen symphony musicians attending the hearing at a federal courtroom in a Bishop Street high-rise.
He said the musicians now hope community leaders will step forward to create a new entity to establish a symphony orchestra.
He said he could not discuss any prospects at this time.
“I’m hoping that a new organization might come out from this,” said Helen Higa, a part-time violinist with the symphony who attended the hearing.
Guben said the conversion to liquidation should not prevent another entity from establishing a symphony.
The society’s board of directors voted last week to convert to Chapter 7.
Symphony leaders previously said that the symphony would continue only if it could find a financially sustainable model for operating. In its news release over the weekend, the society noted the inability of symphony leadership and the union representing symphony musicians to come to terms on a new collective bargaining agreement that would help the society cut costs by more than half in the first years of reorganization.
Negotiations between the two parties broke down in July, leading to the announcement by the symphony society that it was accepting the resignations of the musicians based on its belief that the musicians were forming their own independent orchestra. The musicians, who have not formed such a orchestra, maintained that they never resigned and filed an unfair labor practices complaint against the society.
They later dropped the complaint after the society claimed it could not proceed with filing a reorganization plan with a complaint still pending.
The symphony's endowment, estimated between $8 million and $10 million, is administered by the independent Honolulu Symphony Foundation and would not be part of the liquidation.
Over the weekend, Jonathan Parrish, one of two musician representatives on the symphony board, said he was saddened by the decision but hopeful that it would clear the way for another organization to present live symphonic music in Hawaii under new and more visionary management.
"Many people have expressed that desire to us but they weren't willing to go forward with the symphony society still in reorganization," Parrish said. "I hope this will allow them to come forward now."
Prior to the bankruptcy filing, the symphony covered roughly 30 percent of its overhead through subscriptions and ticket sales and relied on individual and corporate donations to cover the rest. The model proved sustainable for much of the symphony's professional history, but in recent years the symphony was forced to rely on angel donors to provide last-minute bailouts to balance the books.
Symphony Society Board Chairwoman Kimberly Miyazawa Frank said the economic downturn, continued declining attendance for live arts events and other factors created "a perfect storm" that ultimately ran the symphony aground.