By Bill Hirschman
Caldwell Theatre Company has decided to seek federal Chapter 11 bankruptcy protection in the wake of a bank seeking to foreclose on the property and have a receiver appointed to manage the business, the theater’s attorney confirmed Thursday.
The filing could come as early as Friday, but definitely will occur within the next two weeks as the theater collects and verifies its list of assets, liabilities and financial transactions from over the past two years, said attorney Bradley Shraiberg.
He echoed what Artistic Director Clive Cholerton said Wednesday and on Feb. 3: The company plans to continue to operate.
“This is just a reorganization; it is the same chapter (of the bankruptcy code) that American Airlines is currently using. Just like a passenger on American Airlines, you wouldn’t recognize that anything is different. We anticipate the same service to our subscribers so they will not know anything has changed,” Shraiberg said Thursday afternoon.
The foreclosure complaint filed Feb. 9 by Legacy Bank seeks full satisfaction on two loans totaling approximately $5.95 million against the theater’s new building and land at 7901 N. Federal Highway in Boca Raton. A hearing on the request to set an expedited hearing to create a receivership is slated for Feb. 21 before Judge Janis Brustares Keyser.
The region’s oldest professional theater still in operation had been planning for several weeks to restructure non-mortgage debts that top at least $1 million without closing its door, Cholerton said Feb. 3.
“Caldwell continues to operate and will be opening its next show Working as planned. Moreover we are actively planning for next season,” Cholerton wrote in an email Wednesday evening.
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 said Feb. 3.
Legacy’s attorney, Michael Moskowitz, said that the bank has no desire to shutter the theater’s operations or to take possession of the building. “We want them to succeed,” he said Wednesday afternoon.
But bank officials are frustrated to the “boiling point” by what they believe are a string of broken promises, he said. Moskowitz contends the Caldwell has not made a mortgage payment in six months.
“The mortgage… has been a problem since its inception almost four years ago. They are never current. We have been working with them. The mortgage has been recast and the interest reduced to diminish their monthly payments,” Moskowitz said. “We’ve done everything humanly possible, but ultimately you lose patience.”
On July 22, the mortgage was split in two. One portion did not require any interest payments until this coming July, Moskowitz said. The other required regular payments. He doubted there has been much payment into the equity, although he did not have the figures at hand. He said most past payments had been applied to the interest, meaning that the bulk of the original loan is still outstanding.
But Cholerton wrote Wednesday evening, “During this process we have held lengthy talks and discussions with our lender Legacy Bank wherein we believed to have reached an agreement in principle. It is our understanding that their foreclosure filing is simply a step in the process for them as we continued our dialogue today. We remain confident an agreement will be reached.”
Rumors have swirled for more than a year that the 37-year-old 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 fiscal 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 Feb. 3. But Moskowitz said Wednesday that the theater had not made its monthly mortgage payments. Shraiberg said interest payments had not been considered operating expenses.
The situation frustrated the Caldwell’s leadership 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. Supporters filed lawsuits to press the theater to repay personal loans.
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.
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, he said.
But cost estimates doubled 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.
Some of the core audience was alienated by the choices and supporters have asked Cholerton to throw into the mix at least one traditional piece with some name recognition. Working, based on the Studs Terkel book, might qualify. But the following show is Our Lady of Allapattah, an edgy world premiere by acclaimed Miami playwright Christopher Demos-Brown exploring the relevance of faith and the strength of friendship. The Caldwell website describes the plot as kicking off when an inexplicable religious image appears on the side of a Miami strip mall and two police detectives are brought in to investigate.
Cholerton 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 artistic successes such as Clybourne Park, Next Fall, The God of Carnage and the most recent, 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 Feb. 3. “We feel very confident. After all, GM emerged from bankruptcy, a leaner, meaner company. South Florida needs this cultural institution.”