LOUISVILLE — A federal bankruptcy judge ruled Wednesday that the Louisville Orchestra, which has filed for bankruptcy protection, must uphold its contract with its musicians, an agreement that the orchestra's leadership sought to negate to cut costs.
The ruling means the orchestra is required under its workers' collective bargaining agreement to pay the musicians through April. The next payday is scheduled for Friday. The cost of paying the musicians and covering their benefits during that time is estimated at $650,000.
During a proceeding Tuesday, the CEO of the orchestra defended the organization's bankruptcy filing, saying the group had a rapid financial deterioration in the 10 months leading up to the filing in early December.
Orchestra head Robert Birman told federal bankruptcy judge David Stosberg that the group had $15,000 on hand as of Dec. 27 and that tapping its multimillion-dollar endowment to pay bills is not an option. The Courier-Journal reported that the orchestra has relied for the last decade on last-minute bailouts and bequests averaging $1 million per year to stay solvent.
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"It exposes the high-risk nature in which we run the orchestra," Birman said.
In filing for bankruptcy, the orchestra had requested to break its agreement with its players in the Louisville Federation of Musicians Local 11-637. The orchestra is seeking to reduce its number of full-time musicians from 71 to 55 and supplement that with 16 part-time professional musicians. It is seeking to reduce costs by about $1 million.
Birman said during testimony on Tuesday that the orchestra's finances suggest its most realistic operating budget is $5.75 million, much less than its current $6.9 million budget. He said it could reach that smaller figure with the fewer musicians and working weeks, and said the orchestra proposed reaching that through voluntary retirements and buyouts.
Lawyers for the musicians, in questioning Birman, said the orchestra should tap into its $9 million endowment during this crisis to get through the year.
Louisville Orchestra board president Chuck Maisch said the endowment should instead be grown so it can provide dividends for annual expenses in the long term.