Symphony, banks reach agreement to avoid foreclosure on Schermerhorn

Friday, June 21, 2013 at 3:12pm

The Nashville Symphony and its creditors have reached a deal today to restructure the nonprofit’s debt, avoid a June 28 foreclosure and keep the Schermerhorn Symphony Center from being auctioned.

Sources familiar with the agreement told The City Paper that the banks, led by Bank of America, will forgive and write off a significant portion of the debt used to build the Schermerhorn while the symphony will restructure its operations in exchange for new lending terms.

A public announcement is expected soon.

The two sides appeared to be getting closer on Monday when the symphony laid off its entire catering and dining staff, a move designed to cut costs and focus the nonprofit on its “core mission,” the organization said in a statement. Spending outside of music-related activities had been criticized by sources on the banking side during negotiations. The symphony was confident enough in its status with the banks to begin contract negotiations with the musicians union, whose contract expires at the end of July.

Private talks over credit terms went public three months ago.

In March, the symphony association declined to renew a letter of credit when the banks refused to renegotiate better terms for the debt. The symphony claimed that post-2010 losses related to the flood put the nonprofit on shaky financial ground and made it unable to repay the construction-related debt on the Schermerhorn. Sources close to the banks characterized the symphony's spending as “too much.”

As early as April, creditors were exploring foreclosure and, in response, the symphony hired noted bankruptcy attorney Robert Mendes to protect the nonprofit’s assets.

Bank of America, holding more than $80 million in debt related to the building of the downtown center, served notice of foreclosure two weeks ago after negotiations broke down.

6 Comments on this post:

By: bfra on 6/21/13 at 4:34

If they don't get some HONEST financial advisors to handle the money, they will be right back in the same situation.

By: pswindle on 6/21/13 at 7:36

Of course they did!

By: gfgron on 6/22/13 at 12:14

Re-negotiating the debt is a good move ,, if you don't have a conscious.

By: courier37027 on 6/22/13 at 5:10

Next banks bailout will make us all silent partners in the Nashville Symphony. Thankfully the new Convention Center is colored like a turd to remind us of the bad deal that will become.

By: TNReader on 6/24/13 at 8:05

Interesting info from the Symphony's 2011 tax return Form 990: From Sch J Part II, Andy Valentine's compensation $398,355 and the conductor's compensation $471,612. Also from Sch G Part II from their fundraising events the Symphony took in $1,675,755 but netted only $236,412 after direct expenses (only 14% of the amount taken in helped the financial position of the Symphony).

Significant cost cutting and management changes need to be done to make the Symphony financially viable.

By: yucchhii on 6/24/13 at 1:42

Ya know, the saying goes the best form of advertising is by word of mouth..right? Well so is the worst. I have to tell ya that Bank of America is actually "Bank of RIP OFF America". They SERIOUSLY TRIED to rip ME off some time ago on my checking account. I have NO doubts that they would be the Mr. SCROOGE of Banks. They don't give a dam. I know business is business, BUT, to foreclose on the Schermerhorn is like foreclosing on a family with small children and not giving a DAM where the children wind up. That's just me, I HATE B OF A!! I have "NO" trust in them!!! why don't they foreclose on the politicians ay?