The Pasadena Playhouse, a landmark theater that was first opened in 1917, can count itself as yet another victim of the Great Recession. On Tuesday, the venerable theater, located in Pasadena, Calif., filed for Chapter 11 bankruptcy protection.
For theater goers in the area, the news isn't unexpected. The playhouse had shut its doors on February 7, saying it was having some financial problems. It wasn't exaggerating. The theater had no cash, owed $500,000 in bills and couldn't make payments on over $1.5 million in bank loans and debts, the Los Angeles Times reports. More than 35 people were laid off.
Believe it or not, there is a silver lining to this saga. Since the theater filed for Chapter 11 bankruptcy protection (rather than, say, Chapter 7) it intends to come up with a plan to pay its creditors (most likely at a fraction of what it owes), reorganize and eventually reopen. That may not be thrilling news to anyone who is owed money by Pasadena Playhouse, but it's much better than if the theater had filed Chapter 7, under which the creditors would likely not see a dime."This is a necessary step in our strategy to recognize the Playhouse for the benefit of our creditors and the Pasadena community at large," said Stephen Eich, the executive director of the theater, in a statement.
Unfortunately, this isn't the first time this "necessary step" has been necessary. According to the Pasadena Star-News, the playhouse has filed for bankruptcy twice in the last 93 years. The 1960s were particularly rough for the theater. In 1966, the IRS padlocked the doors because it failed to pay $31,000 in back taxes. The theater managed to stay open another three years (the IRS was willing to work with them), but the playhouse had to close its doors in 1969, and then was sold off at a bank auction in 1970. The theater was then bought by the city in 1975, but it took another 10 years before the playhouse opened -- and remained open until recently.
To many people, the Pasadena Playhouse is an institution. It helped plenty of struggling actors get their start, including Dustin Hoffman, Gene Hackman and William Holden. The iconic theater's stage has also hosted an impressive list of actors, including Raymond Burr, Sally Struthers, David Niven, Charles Bronson, Robert Preston and Gig Young -- and that's just to name a few.
But that storied history won't be enough to assuage angry patrons who now find themselves with worthless season tickets. One long-time subscriber, Jeff Sheldon, who co-owns an intellectual property law firm, has been buying Pasadena Playhouse season tickets for years now. He says that they owe him and his wife $1,532 for a full season of plays.
"They took my money at a time when they were probably aware that they were having financial difficulties," says Sheldon, who bought his season tickets in April 2009. In fairness to the Pasadena Playhouse, management probably hoped they could still stave off their financial problems through season ticket sales at that time.
In any case, Sheldon is understandably irked: "That should not have happened," he says. "They owe me money, and there are probably hundreds more people like us."
Unfortunately, Sheldon will have to take a number. Given the way such reorganizations happen, individual creditors like Sheldon are often last in line. However, it may be in the theater's best interest to make them a priority. Sheldon says if the theater refunds his money or gives him free season tickets when it reopens, he'll probably be able to forgive the faux pas. If he doesn't get his money back, he says, "I doubt we'll ever go there again."
Let's hope for the Pasadena Playhouse's and its creditors' sake that this drama has a happy ending.
Geoff Williams is a frequent contributor to WalletPop. He is also the co-author of the book Living Well with Bad Credit.
Take the first steps to building your portfolio.View Course »