By Gina Passarella
Of the Legal Staff
At a hearing Monday regarding the bankruptcy proceedings of the Philadelphia Orchestra Association, the Academy of Music and Encore Series Inc., no one objected to Encore Series Inc. hiring separate counsel in Archer & Greiner.
But it looks like Peter Nero and the Philly Pops' objections over Dilworth Paxson's representation of the orchestra will continue. A hearing on that issue is scheduled for May 23.
Nero's counsel, Paul Rosen and Leslie Baskin of Spector Gadon & Rosen, had filed an objection to Dilworth Paxson representing both the orchestra and ESI because ESI had supported a 2011-2012 concert series for the Philly Pops and the orchestra had not. Nero had further argued Dilworth Paxson should be removed from the case altogether because it had already represented ESI at the start of the bankruptcy.
When ESI announced last week that it would hire its own counsel, Rosen had said that may make his objection moot. But at Monday's hearing, Baskin said her client would press forward with the objection at the May 23 hearing. She didn't elaborate as to why, reserving that for the hearing.
The other conflict issue related to members of Dilworth Paxson and Archer & Greiner sitting on the orchestra and ESI boards, respectively. Each firm said they would create ethical walls to block those board members from having any involvement in their firms' representation of the parties.
Bankruptcy Judge Eric Frank said he was satisfied with the ethical walls and asked the U.S. trustee whether he had any objections. The trustee said his office was fine with the ethical walls and would not oppose the applications of counsel. Frank said he would approve today Archer & Greiner's application to represent ESI.
Dilworth Paxson partner Lawrence McMichael brought up a separate issue about a $225,000 loan the orchestra has made to ESI to help keep concerts going through May. He said he didn’t think that needed court approval because ESI has always been run by orchestra employees, even though it has its own board.
But because ESI is no longer under the control of the orchestra, McMichael said he wanted to make sure the court didn’t think the loan needed approval. When Frank asked why ESI was now under its own control, McMichael informed him that ESI voted to hire its own president and treasurer, who are working for free. They will now make decisions for ESI on things such as vendors, and the orchestra will cease that role.
Also mentioned at the hearing Monday was that all parties agreed concerts must continue to go on and have come to varying financial arrangements to make that happen.
ESI also sought an extension until the end of June to file its schedules even though the orchestra, which is by all accounts a much larger case, has only until May 31. Archer & Greiner partner Stephen Packman said all of financial documents he and accounting firm Eisner Amper need to review are in the custody of the orchestra, which had run ESI. He said the orchestra's lean staff is busy trying to meet its own May 31 deadline and is getting documents to ESI a little bit each day.
Frank said he would mostly likely put a May 31 deadline in place for ESI anyway, but suggested ESI request more time if needed when it gets closer to that date.
Claudia Z. Springer of Reed Smith is representing the official committee of unsecured creditors and Neal Colton of Cozen O'Connor is representing the Kimmel Center, where the orchestra and Philly Pops perform.