Bank of America served notice of foreclosure on the Nashville Symphony, stating that the financial giant plans to auction off the Schermerhorn Symphony Center on June 28.
The Nashville Symphony owes more than $80 million in debt related to the construction of the nonprofit’s downtown home.
“The bank group has been in discussions for some time with the orchestra to help it resolve its debt on an acceptable basis and operate at a sustainable level,” a Bank of America spokeswoman told The City Paper. “However, [the Nashville Symphony] is in default and has been unwilling or unable to repay the debt. Left with no other alternative the bank group has been forced to file for foreclosure, always a last resort. At the same time, we also continue to be in discussions with the Symphony.”
Symphony spokeswoman Laurie Davis confirmed ongoing negotiations.
"The Nashville Symphony is aware that its bank lenders have filed a notice of foreclosure and that an auction of the Symphony’s Schermerhorn Center has been scheduled for June 28," she said in a prepared statement. "The Symphony and its Financial Advisory Committee remain squarely focused on achieving a resolution that positions the Symphony for long-term stability.
"This is a highly sensitive and fluid situation and we cannot speculate on the outcome. Our preferred course of action remains to reach an agreement out of court. That said, the Symphony Board understands and accepts its responsibility to act as necessary to protect the assets of the Symphony. We are preparing appropriate measures to help ensure that the Symphony continues to operate normally and pursue its important cultural and educational mission."
If they are unable to repay or renegotiate the debt, their only option to avoid losing the building would be bankruptcy. To that end, the symphony retained noted Nashville bankruptcy attorney Robert Mendes of Frost Brown Todd this spring.
Meanwhile, in a letter to the Symphony and the banks, Mayor Karl Dean encouraged both sides to reach a settlement "without litigation or a bankruptcy filing."
"It's my view that such an agreement would be best for both the Symphony and the banks, as well as, your collective broader community — Nashville," he wrote. "I urge all parties to consider the use of one of our city's fine mediators."
As The City Paper reported in April, banks have taken a much more aggressive stance with the symphony since the nonprofit declined to renew a letter of credit which backed the bonds used to build the Schermerhorn.
The symphony’s treasurer told the Nashville Scene that move was designed to force a restructuring of their debt.
“What happened was our original business plan did not work out the way we thought, so there was only a slim chance that we would have been able to pay back the entire debt on schedule. We felt it would have been irresponsible to run out of cash later, so we decided we needed to renegotiate the debt right now,” said Kevin Crumbo, president of KraftCPAs’ turnaround and restructuring group.
The Nashville Business Journal wrote on Tuesday that Bank of America put the foreclosure wheels in motion when the bank appointed a new trustee for the loan, Charles Sanger, a lawyer at Bradley Arant Boult Cummings.
Ken Whitehouse and Pierce Greenberg contributed to this report.