After Florida Stage operated as a well-respected theater company for 24 years in Palm Beach County, the company announced its plan to file for Chapter 7 bankruptcy last month. The company is out of business and plans to liquidate assets in the bankruptcy filing. But what led to the theater company’s decision to file Chapter 7 bankruptcy?
Despite warnings from auditors beginning in 2008, the company had failed to significantly cut expenses even though revenue was decreasing. Subscriptions also continued to decline during the recession, and the theater company attempted to move to a new location in an effort to cut rent and maintenance expenses while also attracting revenue from a new audience.
However, the decision to move only added to Florida Stage’s financial problems. “Things happened that year in the new space that they would have needed a crystal ball to avoid,” said the head of the Palm Beach County Cultural Council.
Although the company expected to save hundreds of thousands of dollars in rent, the company ended up spending just as much money for the move and the set-up of the theater in the new space. Many elderly patrons, who accounted for much of the theater’s audience, were not satisfied with the move and failed to attend the theater’s productions. The theater was also unable to market to others in its new location because of a lack of funds.
Just months after the move, the company took out a $250,000 loan and had desperately tried to raise money in fundraisers. By June, the company decided to close its curtains one final time. The bankruptcy filing lists $1.5 million in liabilities. The company is also unable to refund ticket sales.
Many Florida residents and business have encountered financial problems throughout the past few years as a result of the recession. Although some individuals have been able to regain their financial footing, others have continued to see their financial problems worsen. Like the founder of Florida Stage, some individuals may hope that their financial conditions will improve as time passes, but business owners and individuals also need to understand when an issue needs to be addressed before it potentially gets worse.
If Florida Stage had chosen to file for bankruptcy protection sooner, the company may have been able to save some of its assets while also continuing its operations.
Palm Beach Daily News: “Florida Stage: Why the curtain fell, an analysis,” Jan Sjostrom, 25 June 2011