Caldwell Considers Ch. 11 Bankruptcy Reorganization, But No Plans To Fold Or Affect Season

By Bill Hirschman

The board of directors at the Caldwell Theatre Company are considering seeking federal bankruptcy protection as one solution to persisting financial problems at South Florida’s longest running regional theater, but it has no expectations of folding or canceling its season, said Artistic Director Clive Cholerton.

“We’re not going anywhere,” he said in an interview Friday night after briefing local members of Actors Equity Association about the situation.

The Boca Raton-based professional company, now in its 37th season, is weighing three versions of restructuring its debt which tops $1 million. The board is likely to decide which course to take sometime next week, Cholerton said.

One option being considered is to seek Chapter 11 bankruptcy protection which would forestall but not necessarily eliminate debts owed to some creditors. Two other scenarios involve informal deals with creditors to approve structured payment plans.

Cholerton stressed that none of the plans involve cancelling any show and he reiterated that subscribers’ season tickets were safe.

Fresh in his mind and that of much of the theater community was the closing of the seemingly solid Florida Stage which filed for complete dissolution with a Chapter 7  bankruptcy filing in June. The closing left thousands of subscribers with tickets that are worthless unless another theater honors them.

“Chapter 7 has never, ever, ever been discussed or considered or has ever been in anybody’s mindset,” Cholerton said.

Restructuring the debt means developing a feasible payment schedule while staying current on new expenditures. But the non-profit company’s long-term future is predicated on revenues from donors increasing when they see the financial situation has stabilized.

Cholerton balked at specifying the amount of the debt because, he said, he could not be certain Friday and it will have to be precise if court action is taken. But in looking at the company’s 2009 IRS 990 tax return, he said the current accounts payable debt was likely less than the $366,000 listed in the tax document and its “other liabilities” category figure was likely more than the $1.18 million listed in the 2009 document.

In addition, the largest creditor (listed on a different part of the form) is the $5.89 million mortgage on the new building held by Legacy Bank. At one point, the company had failed to meet more than one mortgage payment. But the Caldwell had caught up with payments until the board decided to reorganize the debt, Cholerton said. He said the bank was cooperating on working out a realistic arrangement and already refinanced the mortgage at lower prevailing rates.

Another creditor is Actors Equity Association, the union, which is owed payments toward the pension fund and other benefits. Cholerton flew to New York City two weeks ago to draft an agreement, not signed as yet, to restructure the debt on the condition that theater not fall behind again, he said.

Rumors have swirled for more than a year that the company was about to go under, fueled in part by Cholerton’s public acknowledgement that the company was falling behind on its mortgage and that it owed other creditors.

But the decision to restructure was quietly made at the end of the year when the company had nearly broken even on its $1.6 million operating budget, but had not been able to earn enough to reduce the debt at all, even though some creditors had court judgments, Cholerton said.

The situation was frustrating because single ticket sales had doubled during the year and the level of 2,000 subscribers, while far below the Caldwell’s glory days, had stayed nearly even.

The company’s financial troubles predate Cholerton becoming artistic director in May 2009. But his tenure coincided with a downturn in the economy, the real estate boom and bust, dwindling government support, all dovetailing with the fiscal fallout of a move into a new building whose price tag was nearly twice what was originally envisioned. Cash flow became a problem.

Some of the problem, Cholerton surmised, dates back 15 years when the core of the Caldwell’s subscription and donor base began moving to northern Palm Beach County where donors switched support to Maltz Jupiter Theatre and Palm Beach Dramaworks.

That also meant the demographics of the Caldwell’s Boca-centric base began skewing younger. More residents were parents of children requiring babysitting expense and shorter time away from home for nights on the town. It was simpler and sometimes cheaper to seek other alternatives.

“It’s not impossible to get them, but they are taking less of chance to go to a Broadway tour at the Kravis” theater in West Palm Beach, Cholerton said.

A major problem was the new building. In the early-2000s, plans were announced that Caldwell’s long-time home in the Levitz Shopping Plaza would be razed for a major development. Caldwell co-founder Michael Hall pressed for his ten-year-old dream of a brand-new facility to be directly built directly to the north.

Based on fund-raising pledges such as $1 million from the Countess Henrietta de Hoernle, Hall spoke about the likelihood of opening the $5 million theater with a mortgage-burning ceremony. The money was nearly in hand.

But cost estimatesdoubled after Hurricane Wilma in 2005 made construction materials scarce and the real estate boom jacked up construction prices. The scope of the new building had to be cut back on the drawing board and the theater had to assume a seven-year loan.

Yet another challenge was Cholerton’s goal to attract younger audience while not losing the established core of older patrons. He avoided scheduling familiar warhorse titles that the Caldwell core audience had come to expect. Instead, Cholerton, himself in his mid-40s, began skewing toward new works, contemporary titles fresh off Broadway and off-Broadway, and little known works he believed in because of their quality.

Some were popular and critical successes like his first show, Vices, a sensual original musical about addictions. But others were popular and critical misfires such as Chemical Imbalance and The Comfort of Darkness.

He acknowledges some missteps while seeking the right work to present. “It’s a very, very fine line.” In 2004, the company sold more than 48,000 tickets; in 2008, it was 25,000.

But in the past season and a half, the quality of the productions has improved, with successes such as Clybourne Park, Next Fall, The God of Carnage and the current The Elaborate Entrance of Chad Deity. But these plays about racism, incivility and xenophobia were not what tradition-bound patrons sought. In fact, ticket sales for Chad Deity and the season opener After the Revolution have fallen short of projections.

Besides broadening the subject matter, the company tried other avenues to attract new patrons. It hosted a story-telling series, rented out the house for concerts, gave the premises for staged readings of plays in progress as well as fundraisers like the 24-Hour Theater Project. A stripped-down series of plays was planned last fall in a program called Caldwell 2 at The Studio at Mizner Park, but the finances never came together. Among its most popular initiatives were concert versions of large cast musicals such as The Secret Garden and Sunday in the Park With George.

But the faltering economy has posed problems. The company hasn’t received state grants in years, and its county grant money has shrunk from $180,000 to $57,000. Donors have been hit by the recession.

The long-term solution for erasing the debt is to attract new donors and add fund-raising volunteers to its 18-member board of directors, which has five open seats, he said. The board hopes that a solid, feasible restructuring plan with concrete repayment schedules will win the confidence of donors who have balked at the financial instability. One plus is that long-time champion Patricia Hauben has pledged this winter to donate $270,000 over the next three years.

Caldwell Theatre Company was founded in December 1975 by Artistic Director Michael Hall and the late Frank Bennett, a scenic designer, at the urging of Rubbermaid Corp. founder James R. Caldwell.  Hall gave his audience familiar titles, but also mixed in contemporary works and even gay-themed plays during the summer off-season. Some of its most acclaimed works were the shows that constituted Hall taking a chance: Bent, Fortune’s Fool, The Laramie Project and Gross Indecency: The Three Trials of Oscar Wilde.

But after three decades and more than 70 Carbonell Awards, Hall began prepping a handoff to Cholerton, an actor/director who ran an investment advisory business. He joined the board of directors in 2000 and became chairman two years later. The two worked closely on the opening of the new theater and a smooth transfer.

In 2012, the board remains optimistic that the Caldwell can survive, even prevail, Cholerton said. “We feel very confident. After all, GM emerged from bankruptcy, a leaner, meaner company. South Florida needs this cultural institution.”

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