Troubled waters subside slowly for bankrupt Y

A bankruptcy court judge granted the 140-year-old Germantown institution an extension to propose a repayment plan last week

by MICHAEL J. MISHAK

Four months after filing for Chapter 11 bankruptcy protection, the Germantown Women's Y, 5820 Germantown Ave., continues to fight for its life. Mired in paperwork and court proceedings, the historic institution's board, interim executive director and staff -- mostly volunteers -- are struggling to reclaim a reputation marred by alleged mismanagement. While working to not only maintain, but also increase the Y's programming, board members have found their efforts devoted mostly to sorting out a fiscal nightmare whose origins still remain unclear.

Last week, a bankruptcy court judge granted the Germantown Women's Y an extension to propose a reorganization plan, which must detail how it will address about $600,000 of debt. Also, according to its Aug. 31 bankruptcy filing, the Y owes the Internal Revenue Service an additional $138,384. According to the Dec. 23 court order, the Y has until mid-April next year to produce the plan. The court also recently set a filing deadline of Mar. 1, 2005, for creditors who claim the Y owes them money, said lawyer Jeffrey Daman, of the Dechert LLP law firm, who has guided the beleaguered organization through the recovery process since last winter on a pro bono basis.

Questions about the circumstances that led to the Y's dire financial woes remain unanswered. As reported in the Local's two-part series on the Germantown Women's Y earlier this year, the organization continues to work with a forensic accountant, also on a pro bono basis, to trace the cash flow troubles, Daman said in an interview last Thursday. "We have had some real issues with resolving their books," he said, adding that Dechert, a law firm, is not actively involved in the accounting review. "The board is looking into it the best they can, but they need more help."

After the current board, whose members refer to themselves as "the renaissance slate," staged a takeover in October 2003 -- the second in four years -- they quickly discovered the extent of the Y's debt and faced a walkout from staffers whose paychecks had started to bounce that spring.

The news was devastating, especially to those members who were involved with the first membership takeover in 1999 when the Y's board had voted to close the building and sell the property. Seeking to reverse more than two decades of decline at an institution crippled by circumstance and mismanagement, the new board hired Antoinette Berger as executive director.

Berger's administration clashed with half the board's members who ultimately resigned over what they considered an untenable fiscal policy. When asked about an increase in paid staff without revenue boosts from programming and unfinished capital improvements, Berger was not forthcoming with financial information, then-board member Heike Rass-Paulmier told the Local in September.

Berger denied all charges of mismanagement in an October story, contending that her departure in fall 2003 stemmed from a cash flow problem that was compounded by an aggressive debt repayment plan already in place upon her arrival. Also, grant turnaround times made the situation worse, she said.

Now, the all-volunteer board is attempting to rebuild the Y's Saturday art program for children and looking for more volunteers to teach classes, Rass-Paulmier, now board vice president, said in a phone interview last week.

"Things look better, but it's still rough going," she said. "People have fallen away because of the bankruptcy. The Y has enormous possibilities and we just need to get it in the right direction."

Given a new tenant, hope may be on the horizon.

In April, Tony Award-winning playwright Nolbert Brown Jr. will open his SunTan School of Theater on the top floor of the Germantown Women's Y. Currently recruiting students for the spring semester, Brown has already secured commitments from eight acting hopefuls. He's shooting for at least 30 students by March.

Founded in Atlanta in 1989, SunTan has graduated several successful actors, some of whom have found parts in major Hollywood films, Brown said in an interview on Monday.

Tuition for the two-year program is $5,000. Graduates earn an associate's degree in either drama or theater.

Brown said he first learned of the Y's theater space after being approached by one of the organization's members during one of his productions last year. He financed the complete renovation of the space this fall and has already staged two performances at the new Philadelphia venue.

SunTan will hold an open house for interested students in February, Brown said.

"This will be a big chance for those who want to be actors," he said, noting that graduates get first crack at starring roles in his productions.

Meanwhile, the Y is beginning a new cycle of programs, including printmaking, collage art and photography. Board members are also considering renting space to other organizations.

As the Y continues its search for a paid executive director (volunteer Merrie Baldus has been working in an interim capacity for the last eight months), its magnificent gym remains exposed to the elements, in desperate need of new windows to replace those that have been broken. Focused on repaying creditors, board members have not found the funds to fix the gym floor, which warped after the building's pipes burst last winter.

"We're over our biggest hurdle," Rass-Paulmier said, referring to staving off the liquidation of the Y's assets. "We're excited about the extension, but we're not there yet."