Local News

Third Borders Closing in Louisville

Another Borders bookstore in Louisville is closing as the chain reorganizes its finances under Chapter 11.

Earlier, Borders planned to close two of the four Louisville stores—one on 4th Street Live and another on South Hurstborne. Now, the Shelbyville Road Plaza store is closing (via), leaving one remaining Borders in Louisville, on Bardstown Road.

Local News

Possible Effect Of Borders Closures On Independent Booksellers Unclear

The closure of two Borders bookstores in Louisville does not necessarily mean an increase in sales for independent booksellers.

The Borders stores on 4th Street and Hurstbourne Parkway are among 200 stores closing across the country as Borders goes through Chapter 11 bankruptcy.

Kelly Estep manages Carmichael’s in Louisville. She says it’s not clear what effect the closures will have on independent shops.

“Even people who buy a lot of books from us will still be buying books in other bookstores. That’s something that people who work in the book world always know. So does that mean that maybe someone who bought 50 percent of their books from us will now buy 70 percent of their books from us…possibly,” she says.

Estep says over the years, sales have either risen or remained steady at Carmichael’s.

The Borders stores on Bardstown Road and Shelbyville Road are not set to close at this time. For the complete list of stores closing, click here.

Borders officials would not comment on the closings at this time.

Arts and Humanities Local News

Musicians, Management Awaiting News On Orchestra Payroll

The management of the Louisville Orchestra is awaiting word on whether endowment funds can be spent to pay musicians.

The orchestra is under court order to honor the musicians’ contract, despite a Chapter 11 filing. The body does not have the money on hand to pay the musicians, and management has reportedly sought to tap the endowments.

Both sides in the case declined to comment.

If the roughly $10 million spread over two endowment accounts cannot be spent, there will be few options left for the orchestra’s board of directors. The management, the musicians or the judge could move to make the case a Chapter 7 filing, meaning the orchestra would have to liquidate its assets. Roughly $8 million in endowment funds would then have to go toward financing symphonic music.

The judge in the case is out of town and is not expected to make any decisions until next week at the earliest.

Meanwhile, the musicians and a group of supporters have formed the Keep Louisville Symphonic organization. The nonprofit will hold a free concert Saturday at Ballard High School.

Arts and Humanities Local News

Judge Rules In Favor Of Orchestra Musicians, Warns Them Not To Gloat

Louisville Orchestra musicians must be paid, despite the orchestra management’s Chapter 11 bankruptcy filing. That’s the ruling a federal judge handed down Wednesday. The ruling gives the orchestra’s board of directors limited options for what to do next.

Audio MP3

Pay up or go under: those could be the only options the board has. The orchestra’s management was seeking temporary relief from the musicians’ contract as part of its Chapter 11 filing. The judge denied the request, saying the orchestra would only accrue more debt if the musicians didn’t play, since ticket holders and guest artists could seek money for cancelled concerts.

Now the board must come up with around $650 thousand that will be paid out between Friday and mid-April. The musicians will tentatively continue playing.

If the board can’t find the money, it may need to tap the orchestra’s nearly $10 million endowment. The board could also file for Chapter 7 bankruptcy and essentially close. Board president Chuck Maisch said after the proceeding he couldn’t comment on what the board will do.

The judge told the musicians not to gloat. Their contract expires at the end of May, and the orchestra’s management would then have more leverage in trying to reshape the orchestra into a smaller ensemble that plays fewer shows. Management has argued that a smaller orchestra would stay solvent.

The orchestra is still seeking Chapter 11 protection, and management is hoping to cut one million dollars in annual operating expenses. Both sides could come to an agreement out of court and end the bankruptcy proceedings.

Local News Next Louisville

Motions Heard In Orchestra Bankruptcy

A ruling will be made Wednesday in federal court on motions filed in the Louisville Orchestra’s bankruptcy.

Orchestra management has filed for Chapter 11 protection and is seeking a 4-month break from its five-year contract with musicians in order to reorganize with a smaller number of players and a reduced schedule. If the motion is granted, the orchestra would not be required to pay musicians until April. Musicians have not been paid since the 15th of this month.

The musicians are asking the court to reject the orchestra’s request. They say the orchestra foundation has the money to pay the musicians.

Both sides argue that granting the other sides’ motions would damage or possibly destroy the orchestra.

A judge will rule on the motions at 1:30. The ruling cannot be appealed and could encourage both sides to negotiate out of court to find a way to keep the orchestra solvent.

Arts and Humanities In-Depth News Local News WFPL News Department Podcast

Louisville Orchestra Not Alone In Chapter 11 Filing

The Louisville Orchestra will turn 75 next year. But the orchestra’s administrators and musicians will be more focused on staving off the ensemble’s death than celebrating its birth.

The orchestra filed for Chapter 11 bankruptcy protection last week as management seeks to cut 1.15 million dollars in operating costs. That’s the difference between the current budget and average yearly revenues. The musicians, however, disagree, and say the orchestra is not actually broke. They’re asking the court to throw the Chapter 11 filing out.

If the court upholds the filing, the orchestra will tentatively have until early April to draft a plan for reorganizing its finances. But that will require compromises with musicians and the court, and the path to solvency will likely be much longer.

Audio MP3

Bankruptcy isn’t a new idea to the Louisville Orchestra—its leaders nearly declared it in 2006. And they wouldn’t have been alone. In recent years, ensembles in San Jose, San Antonio and Honolulu have all gone through bankruptcy proceedings.

Last month, reports from Hawaii said the Honolulu symphony was considering folding, rather than continuing to search for an agreement in court. Orchestras in California and Colorado have followed similar paths, though new ensembles were formed afterward in some cases.

The Charleston, South Carolina Symphony Orchestra stopped playing in March, but didn’t take the matter to court. Last week, the orchestra’s management and musicians reached an agreement to cut one million dollars from the budget through a series of steps, including dropping 12 full-time musicians from the ensemble.

“You have a core of musicians that are supplemented by extra players as needed. That’s a very common model,” says Louisville Orchestra CEO Rob Birman, who has discussed a 16-member reduction here. “What we’re seeking is nothing different than trying to be within the average of those orchestras in our budget class from across the country.”

But musicians’ committee chair Kim Tichenor says Louisville doesn’t need to cut…more money is out there.

“I think bankruptcy could have absolutely been prevented. The musicians came up with a fundraising plan back in September,” she says. “Unfortunately, our management refused to fundraise until we had taken pay cuts”

No matter what either says, the fact is that talks broke down. They will formally resume on January 6th with more parties involved. That’s when a judge will meet with the orchestra and its creditors, among them Louisville Public Media.

“There’ll be more information that’s presented, the judge usually considers what’s been put into place, he or she will assign a custodian to oversee the case and they’ll go through a fact-finding process,” says Drew McManus, a Chicago-based arts consultant who often works with orchestras.

McManus says January 6th will mark the start of what could be a year of bankruptcy proceedings, even though a reorganization plan is due in April.

“I would be surprised if they get a decision out of the court by the end of the season, in this case it would be June,” he says. “I think it would be more likely to expect it to last through next fall.”

The parties could also settle out of court and put an end to proceedings. In the meantime, musicians won’t be paid after December 15th, and that’s when performances will stop.

Arts and Humanities Local News

Birman, Musicians Discuss Orchestra’s Chapter 11 Filing

The Louisville Orchestra has filed for Chapter 11 bankruptcy protection.

The organization is about 500 thousand dollars in debt and will not be able to meet its payroll for musicians beyond December 15th. Further, orchestra CEO Rob Birman says the ensemble must emerge from bankruptcy with a 5.75 million dollar annual budget. Its current budget is 6.9 million dollars.

The reorganization plan is due April 4th. Birman says he and other administrators will work with the court and musicians union to find a sustainable plan. He says that may include reducing the number of contracted musicians from 71 members to 55.

“You have a core of musicians that are supplemented by extra players as needed. That’s a very common model. What we’re seeking is nothing different than trying to be within the average of those orchestras in our budget class from across the country.”

Birman says the staff reduction has already been discussed. In the meantime, the administration has asked the court to grant a four-month break from paying musicians starting on the 15th in order to continue day-to-day operations. The musicians would not have to work during that time.

The performances of the Nutcracker that fall after the 15th will be set to recorded music. And unless an agreement between players and administrators is reached, the remainder of the orchestra’s season will not continue next year. But Birman says the bankruptcy declaration is not meant to intimidate the musicians.

“We’ve been very clear since July that if we can’t find an agreement, there will come a time where our resources will be depleted,” he says. “Bankruptcy isn’t a tactic, it’s a necessity in this case simply because the resources are running out.”

Kim Tichenor, the head of the Louisville Orchestra’s musicians committee says the bankruptcy filing was unnecessary. She says the musicians proposed new ways to raise money and bring the ensemble back to solvency, but they were rejected by the administration.

“Unfortunately, our management refused to fundraise until we had taken pay cuts,” she says. “It seems a very backwards strategy to me.”

Tichenor says an orchestra with 55 contracted players would not be successful.

The full interview with Birman and board of directors president Chuck Maisch:

Audio MP3
Local News

Chrysler Shutdown List Includes KY, IN Franchises

From WFPL’s Kristin Espeland

Chrysler announced Thursday that it wants to close hundreds of U.S. dealerships as part of its bankruptcy plans.

The troubled automaker announced plans to close nearly 800 of its Chrysler, Dodge, and Jeep dealerships across the country.

Close to 20 dealerships in Kentucky and Indiana could be affected, including several in the Louisville area.

But they may not go quietly.

The National Association of Auto Dealers is launching a public relations and Capitol Hill lobbying campaign to try to convince the Obama administration to intervene.

In a written statement, an association spokesperson said dealers understand the company is in financial trouble. But they believe they shouldn’t pay the price for it.

The spokesperson also says nearly 40,000 jobs nationwide could be in jeopardy because of the closings. The manufacturer filed for bankruptcy two weeks ago.

The Louisville-area dealerships being targeted include Neil Huffman Dodge,  Alex Montgomery in Mt. 
Washington,  Ray’s Chrysler-Dodge-Jeep in Brandenburg and Coyle Dodge in New Albany, Indiana.

A complete list of dealerships targeted for closing can be found here.

Local News

Bankruptcies Could Affect Gift Card Values

Many people have likely received gifts cards as holiday presents this week, but consumer advocates caution that with the current economic climate, it’s possible such cards could lose their value if the company that issues them goes bankrupt.

Charlie Mattingly with the Better Business Bureau office in Louisville says it all depends on the type of bankruptcy filed. He says companies in Chapter Eleven reorganization can typically continue to honor the cards.

“The risk there is that Chapter Eleven could be converted to a liquidation at some point.   And if it goes into liquidation, if the company actually closes its doors, the customer is going to be last in line at that point,”  Mattingly said.

Mattingly advises as a general rule to use gift cards soon after they’re received.

(Thanks to Dan Modlin,  Kentucky Public Radio/WKYU, Bowling Green)

Local News

Kentucky, Indiana Among States With Highest Bankruptcy Rates

A report released this week shows Kentucky and Indiana are among the states with the highest rates of bankruptcy filings per number of people. Indiana ranks fifth, and Kentucky is close behind in seventh. Kentucky sees an average of about five bankruptcy filings per one-thousand residents.

Kentucky State Data Center Director Ron Crouch says the loss of high-paying manufacturing jobs in the Commonwealth is one factor pushing that number higher.

“Are we in a situation now where we’re trying to race toward the bottom to give workers lower wages and lower benefits?” says Crouch. “That may be what’s happening. We’re losing our manufacturing base, our number of manufacturing jobs has declined from 13% to 11% in Kentucky, and of course that’s a national trend as well, Indiana’s had even a greater loss in their manufacturing base.”

Crouch says the combination of the loss of a well-paying job and a medical emergency often push families into bankruptcy.

The country’s bankruptcy rate is up 30% from a year ago.