The Pasadena Playhouse announced Thursday that it has emerged from bankruptcy, having shed more than $1 million in debt, and will immediately make the intensive, sustained fundraising push needed to re-establish itself as a major theater company.
A $1 million pledge from two anonymous donors has given the Playhouse the foothold it needs to mount a comeback production by October, artistic director Sheldon Epps said — the first since it closed in February, canceling the remaining five plays of its 2010 season and laying off a staff of about 30.
"The most important thing is that the organization took some drastic necessary steps to get rid of this legacy of debt that has haunted us for many years," executive director Stephen Eich said. "We can begin contemplating how to bring [the theater] back carefully, deliberately and slowly, and not have to worry about the bank loan and interest and creditors. That's something very new for this theater."
The plan of reorganization that U.S. Bankruptcy Judge Thomas Donovan approved Wednesday erases all the Playhouse's debts except the obligation eventually to provide its 2010 subscribers with seats for the number of shows they had bought. Among the canceled debts are about $600,000 in loans from Community Bank, about $60,000 in reimbursements and other expenses owed to the City of Pasadena and more than $400,000 to companies and individuals for goods and services.
At the moment, the Playhouse is a shadow of the $8 million a year operation it was as recently as 2008. The organization consists of four employees — Epps, Eich, a bookkeeper and an executive assistant — and the volunteer board of directors that will join the two executives in seeking donations..
Its main immediate assets are a rent-free lease on the theater from the City of Pasadena, and the $1-million pledge from a husband and wife Epps described as "people from the entertainment industry I've had a professional relationship for some time," who have seen many shows at the Playhouse.
The pledge calls for the Playhouse to match the $1 million within two years; the donors will pay it dollar-for-dollar as the matching money comes in. Epps said that now that the Playhouse has emerged from bankruptcy, Wells Fargo has agreed to resume payments on earlier grants it had made, totaling about $350,000 through 2011. He said he expects about $150,000 of the Wells Fargo money to come through in the near future, giving the Playhouse a $300,000 operating stake when combined with matching funds from the $1-million pledge.
Thomas Walper, an attorney with Munger Tolles & Olson, the L.A. firm that represented the Playhouse pro bono during its bankruptcy, said that only one creditor objected to the plan of reorganization, and the judge rejected that claim as "non-meritorious."
Documents in the bankruptcy showed that season subscribers — about 2,600 couples or individuals — were owed about $1.2 million. Walper said many of them have agreed to return their tickets as a donation, or claim just two of the plays they are owed instead of all five.