Second in series by Robert E. Field
As an adviser to the Business Committee of the Pennsylvania Academy of Music (PAM), perhaps my very first act in September, 2009 was to raise funds among the Business Committee to engage Larry Michael, Esquire, of the law firm Dilworth and Paxton from Philadelphia. He was a leading bankruptcy law practitioner and the firm was distant enough not to be influenced by the Lancaster establishment .
McMichael painted no rosy picture concerning the future of PAM if it went through Chapter 11, although it would buy time for operations to continue under the Act’s protection. The process was long and very expensive, perhaps as much as $250,000 for PAM and also for the creditors, and the outcome was not certain. But for PAM to emerge with a plan for reorganization that would enable it to conceivably retain a good portion of the chattel, well over a million dollars in endowments and possibly even acquire the building for a low price, McMichael stressed the importance of having a single class of creditors that would vote for PAM’s reorganization proposal. (One class voting in favor is all that is required for its consideration.)
Not permitted as part of that new class were trustees , their relatives, and myself on two counts, as an adviser and as formerly married to a trustee. An adequate amount to be raised as a loan to the PAM was $50,000, preferably among a few individuals. This could and should have been done at the very outset of the committee’s efforts. Doing so would have changed the dynamics of any negotiation with the UNCB concerning its mortgage and the foundations concerning their guarantees of bank loans which, all in all, totaled about $18 million dollar in PAM debt.
Their counsels would have understood the implications and dire consequences were PAM to seek Chapter 11 protection. UNCB’s very independent continuation and Paul Ware’s ability to obtain charitable deductions were conceivably at risk.
(Nevertheless, I emphasize that PAM may not have emerged much better under Chapter 11. But, by brandishing the credible possibilities of Chapter 11, a more favorable settlement might ultimately have been achieved. This is a classic example of how “The threat is mightier than its execution.”)
But despite increasing urgency to gird PAM for battle, counsel’s preparations of the necessary documents, and ongoing urgings on my part including an offer to raise a good portion of the funds, action was not taken.
Subsequent installments will show the unstinting and generally competent efforts of members of the Business Committee. But nothing over the course of the months to preserve PAM represents better how the insular, internecine culture of those born in Lancaster inhibits taking confrontational stands and thus disturbing the social harmony among the establishment.
