With Savings Like These, Who Wouldn’t Want To File For Bankruptcy?

On 6/28/2012 the Philadelphia Orchestra Association (POA) issued a press statement announcing confirmation of its plan to exit Chapter 11 bankruptcy protection. What might catch your attention is the second paragraph, which conveys how much the POA will save as a result of filing bankruptcy.

As confirmed, the Association will address more than $100 million in claims, debts, and liabilities with a settlement of $5.49 million. Of that total, $4.25 million will be paid on or before the effective date of the Plan.

Although wrapped jargon in safe jargon, the old-school hard sell message is tough to miss: the POA paid 5.49 cents on the dollar for $100 million in expenses. Including this information makes the press statement come across more as a sales pitch for the POA’s bankruptcy firm rather than a fiduciary announcement:

With savings like these, you’d be a fool not to file!

Perhaps unsurprisingly, there’ no mention of the negatives associated with filing bankruptcy; after all, it would be genuinely silly for any organization to include that in one of their own press statements. But projecting such a heroic spin on what is still a very large gamble risks coming across as more than a bit disingenuous.

This is something that would have perhaps been better served by a much shorter, more generic press statement designed to deliver facts and move on. To that end, simply removing the figures from the second paragraph would have gone a long way toward adopting more of an unassuming tone that is perhaps better suited for something such as bankruptcy. For example:

As confirmed, the Association will address outstanding debts and liabilities with the approved settlement and expects to pay approximately 78 percent of that figure on or before the effective date of the Plan.

In the end, when it comes to bankruptcy and public statements, hubris may be considered a dicey approach.

[ilink url=”http://adaptistration.com/wp-content/uploads/POA-Plan-of-Reorganization-Confirmed.pdf” style=”download”]Download the complete POA press statement.[/ilink]

Bankruptcy Hard Sell

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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2 thoughts on “With Savings Like These, Who Wouldn’t Want To File For Bankruptcy?

  1. Drew, is your issue just with how the press release was worded? I can imagine a conversation where somebody wanted to leave the figures out, and somebody else said that would look as if they weren’t being transparent, etc.

    As for your headline, I don’t think any orchestra’s management would seek out bankruptcy based on how much debt Philadelphia was able to get rid of. I mean, it’s a lot of fun to go through that process and all… 🙂

    • I agree that getting hit with the transparency issue if they didn’t provide the figures was something to be considered and I spent some time thinking about that as well so I’m glad you mentioned it.I edited out a good bit of content along those lines that led into the remaining PR content because the piece seemed to meander but including the figures with that phrasing along with the following paragraphs (which really project the bulk of the heroic tone I referenced) is a bad mix.

      A stripped down PR with the revised passage I offered up while also removing the other statements would have projected a more accurate tone for this sort of business.

      And as for whether or not orchestra managers sit around and pat each others backs for something like this sort of bankruptcy, I would be quite surprised to encounter any. These are the folks that endure the full brunt of the ugliness that is the bankruptcy process. But I can say from first hand experience that the same thing isn’t true for some of those entrusted with governance. I should have made that clearer in the post so thanks for bringing it up here.

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