The Honolulu Symphony's directors vote to shut down the organization for good
POSTED: 1:30 a.m. HST, Dec 12, 2010
The Honolulu Symphony Society's board of directors has unanimously voted to abandon efforts at bankruptcy reorganization and to dissolve the organization, effectively ending the symphony after 110 years.
The decision, approved Thursday at a hastily called board meeting, came roughly a year after the Honolulu Symphony Society filed for Chapter 11 bankruptcy in hopes of salvaging the debt-ridden organization.
The society was scheduled to appear in U.S. Bankruptcy Court tomorrow as a follow-up to an earlier request to extend its deadline for filing a reorganization plan. Instead, the society's legal representatives will ask that the society's Chapter 11 bankruptcy filing be converted to Chapter 7 bankruptcy, which would result in the dissolution of the organization and the liquidation of all of its assets, including its extensive music library.
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.
"It is a very sad day for us," said symphony society board chairwoman Kimberly Miyazawa Frank. "Certainly, none of us, when we filed for Chapter 11 bankruptcy a year ago, hoped that this day would come. We would have liked to been able to develop a plan and a corresponding budget that would sustain us for another 100 years, but at the end of the day we just weren't able to do that."
Since performances were suspended midway through the 2009-2010 season, the symphony leadership had said repeatedly that the organization could move forward only if it could find a financially sustainable model for operating. In a news release yesterday, the society cited the inability of symphony leadership and the union representing symphony musicians to come to terms on a new collective bargaining agreement as one of the reasons it was not able to finalize a plan for reorganization.
The musicians, anticipating that the symphony society would blame them for the failure, preemptively released a statement two weeks ago expressing disappointment in the society's rumored consideration of Chapter 7 bankruptcy.
Yesterday, 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.
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.
In 2009, symphony musicians -- who five years earlier had agreed to significant pay cuts to help the symphony stay afloat -- continued to perform despite being owed some three months' back wages. When symphony leadership finally pulled the plug on the season and filed for bankruptcy on Dec. 19, 2009, the organization was roughly $4 million in debt.
The symphony society commissioned an extensive organizational analysis, conducted by Honolulu Symphony Foundation Vice President Mark Wong's Commercial Data Systems company, that yielded a series of proposals to reduce the symphony's annual budget from roughly $8 million to $1.7 million in the first year of reorganization. Much of the savings was to be realized through a radical cut in the number of performances staged each year, which would effectively reduce musicians' annual income from $30,885 in the last complete season before bankruptcy to $3,256 in the first year of reorganization.
The musicians were critical of the analysis, which they said was flawed in its data collection and biased against them; of the recommendations for cuts, which they said would unnecessarily deprive them of a living wage; and even of symphony society leaders like Executive Director Majken Mechling who do not have musical backgrounds.
THE TWO SIDES met twice over the summer to negotiate a new collective bargaining agreement -- which the symphony society said was necessary for the finalization of any reorganization plan -- but were unable to agree on terms. The musicians, represented by the Musicians' Association of Hawaii, Local 677 of the American Federation of Musicians, rejected what the symphony society termed its "best and final offer" on July 9, leading the society to declare an impasse in negotiations. The union, which had submitted a counteroffer that was ignored, responded by filing a grievance with the National Labor Relations Board claiming that the society had not bargained in good faith.
The contentious coda took a bizarre turn when the society later announced that it had accepted the musicians' "resignation" based on its belief that the musicians were forming their own independent orchestra. The musicians denied that they were forming any such organization and that they had resigned from the symphony.
Both sides insisted that they were willing to continue negotiating, but neither initiated further discussion of the contract. The musicians eventually dropped their grievance so the society could not use that as an excuse not to submit a reorganization plan to U.S. Bankruptcy Court as scheduled last month. Regardless, the society requested an extension on the submission.
Rumors of the society's intention to liquidate the organization intensified this week after symphony leaders called a meeting of the full board, on just two days' notice, to discuss issues related to the bankruptcy. However, the two musician representatives on the board -- both full voting members -- were excluded from the meeting, as they had been from portions of other meetings dating to the original bankruptcy filing. Miyazawa Frank said it was standard practice to exclude the musicians from discussion involving aspects of the bankruptcy or proposed reorganization as a way to avoid potential conflicts.
Mechling said Miyazawa Frank and the rest of the board acted responsibly to fulfill their fiduciary duty to the organization, despite being portrayed as "the bad guys" in the community.
Miyazawa Frank said the society had also managed to reduce its monthly overhead over the past year to about $50,000 by cutting staff and moving its office to a less expensive location. The monthly expenses included the salaries of its two paid employees -- Mechling, who is paid $175,000 per year, and an administrative assistant.
Parrish said he and his fellow musicians are no longer interested in trading accusations with the society and are eager to help a new symphonic organization get started.
"The longer we go without performances, the harder it will be to get something going again," he said.
In the meantime, symphony musicians have been contracted to perform with Ballet Hawaii and the Hawaii Opera Theatre.