The Syracuse Symphony Orchestra bought this Steinway six years ago for $50,000. It's worth up to $96,000 now , and it's among the assets likely to be auctioned during bankruptcy.Syracuse Symphony Orchestra officials traveled to the Manhattan showroom of Steinway & Sons in February 1995 to pick out a new grand piano. They settled on the largest piano Steinway produced: a 9-foot-long Model D, with a black lacquer finish.
The orchestra paid $50,000. Days after the purchase became public, a local couple who loved keyboard music gave the symphony $50,000.
Two years ago, the financially ailing symphony put up that essentially free piano, worth more than $75,000, as collateral for a loan from M&T Bank, state records show. That gave M&T a lien on the piano, much like a bank may hold a lien on your car. M&T, in fact, took a lien against everything the symphony owns, according to records.
As the SSO heads toward its final movement — dissolving itself in a Chapter 7 bankruptcy — everything the symphony has acquired over the past 50 years could be sold to the highest bidder.
Among the items on the block: The symphony’s extensive library of sheet music, sometimes replete with musicians’ hand-scribbled notes; that Steinway piano, on which classical pianist Lang Lang first played Beethoven’s “Emperor” concerto; and a celeste, the instrument that produces the distinct plinking sound of the Sugarplum Fairy dance in the holiday classic “The Nutcracker.”
“There’s nothing left. Chapter 7 is corporate death,” said Greg Germain, a law professor who teaches bankruptcy law at Syracuse University. “I think what it signals is that the management of the SSO decided there’s nothing to do but liquidate it and close it.”
The symphony board March 29 suspended the rest of the season and voted Tuesday to file for bankruptcy protection. Local bankruptcy lawyers expect the filing to happen this week and say the whole case could be wrapped up in two to three months.
The end of the Syracuse Symphony Orchestra, however, does not mean the end of any symphony orchestra in Syracuse. In many other cities — San Diego, Nashville and Oakland, Calif., among them — bankrupt symphonies have been pulled from the ashes by benefactors or governments.
The president of the SSO Foundation, a non-profit group that supports the symphony by raising money and managing an endowment, believes that will happen here.
“I expect that there will be a new classical music organization in the community,” David Ridings said. “It will take some time, and it probably should take some time. The musicians feel damaged. The board feels damaged. Lots of donors feel hurt and damaged, and it’s going to take some time to get past that.”
Ridings said he couldn’t guess when that might be.
A Chapter 7 bankruptcy would wipe out the symphony’s debt and void its contract with musicians. Any new symphony would start with a clean slate.
The foundation has an endowment of about $7.5 million that could help support a new orchestra, Ridings said. The foundation can’t touch the principal, but it has generated enough earnings to provide about $350,000 a year to the SSO, Ridings said.
If the SSO dissolves, the foundation’s charter says the money can be used to “support the organization of a new symphony orchestra in the Central New York region.”
First, though, the SSO must go through a liquidation over which it loses control of its fate and its assets. If the orchestra files Chapter 7 bankruptcy, the court will appoint a trustee to take over and conduct a sale of the assets.
Symphony managers say the orchestra owes about $5.5 million. According to recent financial statements, the SSO showed debts of about $560,000 to M&T, $380,000 on a loan from the symphony foundation and $2.4 million to the musicians’ pension fund.
The latest available audit, from August 2009, shows non-cash assets of $130,000. The symphony could also have non-tangible assets, such as rights to recordings it has made, contracts with performers and even its name, said Todd Brown, a professor at University of Buffalo School of Law.
Still, those are apparently not enough to cover the debt, Brown said.
“Typically if you’re going to file a Chapter 7, you’ve got to be so far under water you don’t have any high-value assets,” he said.
M&T liens, if still in effect, would give that lender first priority on the sale of assets. If there’s any money left over, patrons who bought tickets for canceled concerts might get at least partial refunds, and musicians might see some of the money owed to them. Last in line would be those who loaned money without collateral, and vendors who provided a service — catering or printing, for example — and haven’t been paid.
The foundation is one of the unsecured creditors. The foundation loaned the symphony $380,005 in September 2009, Ridings said, and none of it has been repaid.
“We’re not going to get paid back now,” he said.
The symphony’s assets include the Steinway piano, which has a fair market value of $75,000 to $96,000, said Frank DeFonda of Clark Music, in Syracuse. The symphony bought the piano through Clark’s in 1995. The piano is wedged into a cinder-block storage room near the stage of the Civic Center.
The most important asset is the collection of musical scores acquired over the symphony’s 50 years, said Heather Buchman, the conductor of the Hamilton College orchestra. Such libraries can be extensive: The Honolulu symphony had 2,700 works when it sold them last month.
“The real crucial thing is the music library — all the individual musical parts for all the Beethoven symphonies, all the Brahms symphonies, just hundreds and hundreds of pieces,” said Buchman, who was a member of the San Diego Symphony when it went bankrupt.
Rebuilding the music collection would be prohibitively expensive and, in some cases, impossible, Buchman said. Beethoven symphonies might cost $400 each, she said, but works by some 20th century composers, such as Dmitri Shostakovich and Igor Stravinsky, are still under copyright and could only be rented at a cost of thousands of dollars, she said.
The scores are worth hundreds of thousands of dollars, said Jon Garland, chairman of the SSO musicians’ committee. One of the first clues that management was seriously considering bankruptcy came a week ago when the musicians’ librarian told the other musicians that management had called to ask for an inventory of the music, Garland said.
Musicians are watching the fate of their pension fund, to which the symphony owes about $2.4 million. Bankruptcy lawyers say it’s likely the federal government, through the Pension Benefit Guaranty Corp., will essentially bail out the symphony’s debt and take over the pension fund.
The classical music world is littered with of stories of bankrupt orchestras revived.
The Honolulu symphony filed Chapter 7 late last year, and in March a group calling itself the Symphony Exploratory Committee bought all the assets for $210,000.
In 1988, the city of Oakland bought the music library of the bankrupt symphony there, and that collection is used by a new orchestra.
Just two days before the San Diego Symphony’s assets were to be auctioned in a bankruptcy court in 1996, a local businessman stepped forward with $2 million to save the day. The symphony — and its extensive music library, which had attracted potential buyers from as far as Wisconsin — remained in San Diego. The orchestra last year celebrated its 100th anniversary.
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