Nashville Symphony receives notice of foreclosure on Schermerhorn

Thursday, June 6, 2013 at 5:02pm

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.

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33 Comments on this post:

By: Jughead on 6/6/13 at 3:36

The NSO has been grossly mismanaged (from a financial standpoint) for years. The current management would have sunk this ship regardless of the flood or the economy.

It was NOT the flood, it was poor business practices.

By: Loner on 6/7/13 at 5:26

The music in "music city" is endangered....the Music City Center (MCC) should be quickly renamed: they should call that huge monstrosity the Jock City Center (JCC).

BTW, is the MCC also on the Cumberland flood plain? It's only about 3 blocks from the river. But hey, I'm sure that the planners though of everything...just like they did with the Schermerhorn.

Would the last musician leaving the Schermerhorn please turn off the lights, thank you.

By: Loner on 6/7/13 at 6:00

When fine, upstanding, highly-trained, symphonic musicians turn out to be flakes and they default on their major loans, you gotta wonder, who CAN you trust these days?

It's hard to feel empathy for the banks, but dammit, somebody scammed somebody....this Schermerhorn deal stinks....and it's not just the filthy residue from the flood.

By: govskeptic on 6/7/13 at 6:49

This is a staggering sum to still owe on this building after the huge pledge for the
building by Mrs. Ingram, who named it, and the 20 million the city gave toward the
project along with the great deal provided by the city on the old firehall property.
Was the city lied to about the original financing or everyone knew the real deal
other than the taxpayers? Remember folks, we may not hold any equity in the
project, but certainly have put a lot of city dollars into it.

By: Loner on 6/7/13 at 7:19

The Schermerhorn? Wasn't that an obsolete brass instrument, a sort of keyed bugle?

I think that John Phillip Sousa wrote martial music for the Alto, Tenor and Baritone Schermerhorn....apparently it was a very difficult instrument to master, according to musical historians.

By: Jughead on 6/7/13 at 7:21

Let's not lump the musicians with the management---Giancarlo is fabulous and the musicians are top-notch. And, the musicians have been getting reamed by management for years.

NSO is in complete disarray on the management side, starting with Alan Valentine and heading down. They spent recklessly and did not give a damn about accountability.

NSO WILL survive...no doubt...but it is time for bankruptcy and to absolutely clean house on the management side. Bring in some people who know how to run a business, and can the entire board of directors.

And, Metro is going to have to become a stakeholder. This is one Karl Marx Dean project I would support.

By: Jughead on 6/7/13 at 7:22

Do you enjoy putting your stupidity on display, Loner?

Take some advice from Mark Twain already, azzhat.

By: kevin47881 on 6/7/13 at 7:48

The homeless need a place to call home. Convert the NSO into 'free' public housing. The stage area can also be used as a humane shelter. That would give the homeless something to do and allow for a good supply of volunteers to run the program. Sometimes you need to think outside the box.

By: BigPapa on 6/7/13 at 7:56

I wonder if Martha could flip the bill for the whole thing. $85M is a lot of coin, even for a billionaire like her.

By: Jughead on 6/7/13 at 8:39

I say gather the homeless bums and sell them for soylent green.

By: Loner on 6/7/13 at 8:39

Jugs...I have access to a vintage alto schermerhorn...I'll make you a good deal on it...you can blow that thing on the streets of Music City, as a busker, and help support your habit....with the schermerhorn, they pay you NOT to play...it has the timbre of rotting timber....whaddya say?

By: Jughead on 6/7/13 at 8:40

I'll give you something to blow on, Loner. Nimrod's junk is waiting.

By: Jughead on 6/7/13 at 8:42

I want Phil Bredeson to be appointed receiver for the NSO.

Help us, Phil!!!!

By: Loner on 6/7/13 at 8:44

Back to the homophobic humor, Jugs? Your repertoire of ad hominems is quite limited....your fascination with male genitalia is well-documented on these comment boards....you ought to just come out of that closet, Jugs.

By: Left-of-Local on 6/7/13 at 9:49

First, as usual, correcting Loner... the MCC is designed specifically with flooding in mind, which is why it not only contains pumping systems, but the exhibit hall is positioned high in the building. You'd know this if you were an engaged and active citizen.

But to trumpet something VERY RIGHT that you said... JOCK CITY CENTER... true. The jackasses who manage the venue are going to betray the people of the city in favor of dangerous and shallow groups, like the NRA and the sports fest.

Jug is right on about the mismanagement of the symphony. Possibly the worst local brand our city has. That's pathetic, and the people should be outraged.

Here's an idea... How about the city step up and help? Maybe own ThAT building instead of being dumb****s with things like the only library.

Last element of concern... BANK OF AMERICA. Can we maybe get this OUT of the hands of one of the most corrupt banks? I don't trust a DAMN thing going on when they show up.

By: Jughead on 6/7/13 at 10:01

No, Loner, it is you who is constantly reminding me of the awesomeness of my Johnson. Struggling with an issue, bigboi?

By: joe41 on 6/7/13 at 10:07

Come city fathers, lets get this thing paid off NOW!

City fathers are the well-to-do who can afford this.

Joe

By: Jughead on 6/7/13 at 1:09

The Musician's Union just issued a stupid statement blasting all accountants, lawyers, bankers, and "bean counters."

What idiots. Those are the people who buy tickets who pay the damn musicians. How stupid can the AFM be? Morons.

By: Loner on 6/7/13 at 1:45

So, when the next flood hits, the MCC will be able to handle it with pumps....and where will they pump the water to? And these massive pumps have their own power generators, capable of supplying the necessary power to the pumps in the event of a prolonged grid power outage?

The Titanic had pumps too...good luck with that half-billion-dollar investment sitting on the Cumberland's flood plain.

By: Jughead on 6/7/13 at 2:24

It is a myth that the flood caused the NSO demise. It was failing before the flood because Alan Valentine and Company are morons.

We need Phil Bredeson to step in and get the friggin mess cleaned up--and to get a Board and Officers who have a clue about running a business.

By: Rasputin72 on 6/7/13 at 2:44

As a one who values the Schermerhorn for many reasons I I see no reason for panic. This building is only in the midst of being revalued.

Two years from now nothing will have changed except perhaps the name.

By: Jughead on 6/7/13 at 3:27

Revalued?

The NSO is 85 Million in debt, operates at a huge loss each year, and cannot come close to making payments on the debt.

They are not going to be able to "cram down" their debt to the building's value---and, Chapter 11 ain't gonna work because the current business plan is hopeless.

Metro is gonna have to step in.

By: pswindle on 6/9/13 at 12:00

There are many rich people in Tennessee and Nashville and it would take 80 + millionaires to donate one million each and then they could take is off of the tax returns. The next thing to do is to fire the management and hire a business person to run and turn this worth-while project around. Nashville and TN needs this wonderful venue.

By: BigPapa on 6/10/13 at 9:14

It sounds like there were audits waaaay before that pointed out the issues but all the findings and recommendations were ignored. They need fire everyone in charge, bring in new management and pray that some whale will come in and bail them out.

This is not a Metro issue. Not a place for the government to step in, we're already writing checks to support an unpopular hockey team. We dont need another charity case.

By: dargent7 on 6/10/13 at 9:22

This is beyond pathetic. The USA can find $4. billion a week to invade Iraq, but cannot find $80. million to keep Nashville's symphony up and running?
I worked there for 4 years...every night it was packed.
Where's Al Gore when you need him? Do a freekin' fund raiser.

By: BigPapa on 6/10/13 at 10:00

Wow darg that's a heck of a leap from the Iraq war to something as pipsqueak as the Nashville Symphony.

That's not an Apples n Oranges comparison, dude you aint even in the right grocery store with that one.

Try again.

By: dargent7 on 6/10/13 at 10:32

Ok, Pops, one has nothing to do with the other...
Like all you morons care about is carrying guns into bars, have them in your employee trunks, in parks...always armed.
And The Symphony is in a state of foreclosure and you idiots wouldn't give a damn.
"Shurt 'er down..." What's culture to the South?
Tenn. is 46th out of 50 states in achedemic achievement. Now, see a connection?
Naw...stretches the mind too far outside the bun.

By: govskeptic on 6/10/13 at 11:12

pswindle for Treasure and Chief Cashier and Bankrupcy Receiver for the Symphony hall. Math genius.

By: BigPapa on 6/10/13 at 1:42

Take your meds, and come back with a real conversation about the topic.
You guys always get desperate and just go to typical stuff.. "Hey you live in the South.. You sleep with your sisters and you all have gun racks in your truck! blah blah blah.." very old very tired.. just something to say when you have nothing to say.

By: BigPapa on 6/10/13 at 1:51

Here are the perimeters of the topic. There's a symphony in the city of Nashville that is broke because the money it had was mismanaged. It's not just a southern thing, you can see that in the article other cities symphonies have suffered the same fate. So it's not just us ignorant hicks that cant understand or appreciate a night at the symphony.

It's an unpopular, niche form of entertainment. Therefore it's incumbent upon those that enjoy that form of entertainment to fully fund it, or it gets cut/scaled back to accurately reflect the level of interest in that form of entertainment.

The only questions are:

Are there enough big wigs in the city that care enough to save it?

Can they make the changes necessary to manage their way out of this?

By: Jughead on 6/10/13 at 2:32

NSO has a spending problem. And, the Board should be canned for letting management waste millions.

By: slzy on 6/10/13 at 8:11

Amusingly the only President to be married to one of his relatives is the leftist elitist neo-Marxists demi- god FDR.

By: whitegravy on 6/10/13 at 10:06

CITY: make the NSO hall a regular concert hall and CUT YOUR LOSSES......