Circle in the Square Hasn't Paid Royalties on Stanley

News   Circle in the Square Hasn't Paid Royalties on Stanley Add playwright Pam Gems to the list of creditors seeking money from New York's bankrupt Circle in the Square theatre.

Gregory Mosher, who served as Circle in the Square's producing director
Gregory Mosher, who served as Circle in the Square's producing director Photo by Photo by Brigitte Lacombe

Add playwright Pam Gems to the list of creditors seeking money from New York's bankrupt Circle in the Square theatre.

Gems' Stanley provided a spring 1997 hit for the theatre, in what may turn out to be CIS' final production. Flora Roberts, Gems' agent, told Playbill On-Line that CIS has not to date paid royalties to Gems.

Creditors are seeking in excess of $3.5 million from the bankrupt Circle in the Square Theatre, a New York cultural landmark for more than 45 years, which suspended operations June 17, 1997.

Respected general manager and producer Norman E. Rothstein, who, as he put it, "unluckily inherited the brass ring" when appointed last December as the bankruptcy court-approved business and financial consultant to the creditors committee, said July 1 that the creditor committee is "restless and seeking any responsible, viable performing arts group to effect a sale."

Marc Chaiken, the chairman of Circle in the Square's board of directors announced in an informal June 19 hearing in the chambers of Tina L. Brozman, chief judge of the United States Bankruptcy Court, Southern District, New York, that CIS was suspending operations. Employees had been discharged and the theatre was dark. The news came as a shock to the theatrical community, but there were signs over the last ten years that CIS was in trouble and drastic measures were needed to rescue it.

Rothstein told Playbill On-Line, "This is a mess. This is my first such association with a bankruptcy situation, so I have nothing to base it on. It's a mess that's been in the process of coming for a long time. CIS is a financial shambles and it didn't happen in just the last year. There are hundreds of debtors to be satisfied, not to mention a pending claim from 1978 of more than $1.8 million from the Internal Revenue Service."

There's concern that action taken in 1993 to make CIS's professional theatre school became a separate entity "was done in contemplation of bankruptcy," said Rothstein. He explained that though the school continued to operate as of a week ago, he does not know the status of the school's future or where it will be headquartered.

However, a call to Circle in the Square Theatre School revealed, as the switchboard operator put it, that "we're here and going." The summer session, with approximately 70 students enrolled begins Monday, July 7, according to school director E. Colin O'Leary. Calls to the school's artistic director and Circle co founder Theodore Mann were unanswered at his office at the original Circle space on Bleecker Street in Greenwich Village.

"In the shutdown of Circle," said Rothstein, "the previous management failed to pay many bills, including the electric bill. Supposedly, the electricity has been terminated." He added that the school, which is not in bankruptcy, is "legal."

A sign is posted at the closed main entrance of CIS in the arcade of 1633 Broadway, which is also the entrance of the theatre on 50th Street, between Broadway and Eighth Avenue, instructing students to use the stage door entrance. A source at the school said this was for security reasons "and on Monday the main entrance may be open."

The bulk of the claims against Circle in the Square come from theatrical unions for their pension and welfare funds.

The creditors are represented by an overseeing committee of five court-chosen trustees of the union pension, welfare, and annuity funds and an arts organization that makes loans to theatre institutions. The unions are: the Association of Theatrical Press Agents and Managers (ATPAM); stagehands' Local One of the International Alliance of Theatrical Stage Employees (IATSE); Treasurers and Ticket Sellers union Local 751; and Theatrical Wardrobe union Local 764 of IATSE. The last committee member represents the New York Foundation for the Arts.

The bankruptcy department of Phillips, Lytle, Hitchcock, Blain & Hubert is the court-approved firm to represent creditor interests, According to Linda Jamieson, an associate lawyer on the case, the New York Foundation for the Arts made a $75,000 loan to CIS "which Circle got behind in paying back."

Bob Cleary, president of the Treasurer's Union, said their pension,welfare and annuity fund was owed "a pretty sizable amount," $90,000.

Ronnie Lynch, the legitimate-theatre business manager for Local One of the Stagehands Union, is not on the creditor committee but for several years has negotiated contracts with CIS. "Our pension and welfare fund is owed a debt in the high five figures and it will probably take years to even realize a fraction of what they owe." He reported that CIS was often delinquent in making payments to the fund, "but since they made attempts to catch up, we always worked to keep them open. It was in the best interests of our members. Everyone was caught off guard when they went paws up."

Rothstein said that statements issued by CIS producing director Gregory Mosher, former director of Chicago's Goodman Theatre and Lincoln Center Theatre, about CIS rising from the ashes have been questioned by creditors.

Once CIS has paid the I.R.S. and settled their various debts, Mosher said he feels "There is enough of an audience, artistry, and cash to make Circle in the Square a thriving institution."

Kevin McAnarney, the press representative for the creditors committee, issued a statement July 1 that seemingly rings down the curtain on CIS as theatregoers have known it. The organization was founded as a small Greenwich Village theatre-in-the-round in 1951 by Mann, long its artistic director, and Jose Quintero.

The statement reads: "Circle in the Square Inc., the not-for-profit operating organizations which produced plays and musicals in a long and distinguished history at the former Circle in the Square Theatre on West 50th Street is regrettably bankrupt, insolvent, and defunct."

The statement adds that in the interest of the cultural community of New York City, the creditors want "to quickly reestablish the facility as a functioning theatre."

According to records in Jamieson's office, an entity known as Thespian Theatre holds the master lease on CIS since 1985. "Modifications have been made to this lease since then," she reported. The not-for-profit school maintains a sub-lease with Thespian Theatre for the entire space.

Jamieson noted that "in a convoluted . . . arrangement, the school in essence sub-leased space to Circle."

Rothstein observed "in layman's language" that the creditor committee is "restless and seeking any responsible, viable performing arts group to effect a sale." He added that "any plan to reopen a new Circle with present management in charge would be met by creditors with deep skepticism. After ten months of Chapter 11 reorganization, which began in August, 1996, and failed rescue attempts by Circle the committee feels the theatre is in some ways worse off now than when reorganization began. They have no money in the bank."

Rothstein and Jamieson noted CIS was taken to task in court appearances during reorganization for not seeking court approval for "dozens of actions taken not in the everyday course of business," such as undertaking a highly publicized subscription drive and employment contracts negotiated in hiring the three CIS principals, Mosher, executive producer M.Edgar Rosenblum, and director of planning and development Barbara Groves.

To attract audiences, CIS hosted star Al Pacino to star in a return engagement as Eugene O'Neill's Hughie, which extended several times. Then Mosher introduced a seemingly fail-safe plan to fill seats: a $37.50 subscription (plus $2.50 service charge) with a guarantee of $10 tickets and a 1996-97 season featuring the acclaimed English import Stanley.

But as the theatre season ended in the spin of awards ceremonies, including the Tonys (CIS's Stanley recevied nominations for Best Play, Actor, and Director), no additional plays were announced. Subscribers, as committee representative McAnarney put it, "ended up paying almost full price for one play and, since there's no season, they potentially could become creditors."

Rothstein observed that even after the highly successful Hughie, which grossed approximately $700,000, and the sale of subscriptions, "which made several hundred thousand dollars for Circle," CIS listed administrative debt of excess of $205,000. But when he and the theatre professionals on the committe "did our own number crunching" and discovered additional debt in excess of $50,000 in addition to bank overdrafts. Rothstein believed the situation was closer to $300,000 "beyond what they already owed. At that point, even the board of directors realized they were in dire straits." Rothstein estimated current debt at $4 million and noted that Stanley, which cost CIS $600,000 to mount, did not recoup its production cost.

Critics of actions taken during the reorganization criticized such things as full page newspaper ads and billboards touting the Tony nomination for Stanley when the production was in its final weeks.

Reorganization became an arduous and difficult process, said Rothstein, "as we (the committee) tried to get Circle to take care of debts and obligations. You don't get to do business as usual. You have to make your payments -- rent, utilities. And in the process Circle racked up more debt. We knew from the beginning that the theatre didn't operate in the black. There has been never been sufficient revenue from its productions. Fundraising contributed to their attempts to balance the budget."

Rothstein explained during reorganization attempts, "there was a series of small then large errors that compounded into an abyss. Finally, it became clear we weren't understanding one another regarding Circle's assets and where money might come from. Suspicions arose over the various financial statements given to the committee. Last November Judge Brozman appointed me as mediator between the parties to develop a reorganization plan that would hold water."

At least two plans, according to Rothstein, "were developed by the board and attorneys for both sides and then, frankly, collapsed because the Circle was unable to ante up to meet the conditions of the plan."

The Circle board of directors, as is common in a not-for-profit arts institution, was made up of well-heeled volunteers. Upon reorganization, nine of the 15 board members resigned and a new board was assembled over several months. New members were required to make an annual contribution of $12,500.

Rothstein stressed that many problems developed "because of a failure by the board to grasp the realities of bankruptcy. I've never believed Circle was acting in bad faith, nor do I attribute to Mosher or Rosenblum malice of forethought or deliberate subterfuge. In their anxiety to get Circle relaunched, they simply acted in a rather reckless fashion not only in their board's opinion but also in the opinion of the committee." Between January and March, Rothstein reported, "there was a continuing set of memoranda, phone calls, private meetings, not so private meetings, suggestions, and diplomatic overtures in which we received financial projections. The expert negotiators on the committe and myself found these overstated by a third. No matter what we told them, Circle believed they'd be able to fund raise while under Chapter 11 conditions. Over and over, I asked 'Why would any sponsor give them money when, under the bankruptcy rules, it would be be sucked up into the fund pool to eventually settle debts.'"

Rothstein said he remembered he and Leon Marcus, a senior partner at Phillips, Lyle (the firm representing the creditors), yelling across the table, "This isn't going to happen!" Marcus went further, telling the board, "You guys aren't going to survive in Chapter 11. You're not going to raise a dime."

Mosher explained that "it wasn't Chapter 11 which hendered fundraising for Circle, but the tax lien. Donors were reluctant to contribute until that issue was resolved."

Mann, on the other hand, said recently that Circle has been disputing the tax claim "since the 70s" when the I.R.S. refunded $200,000 to CIS and later claimed the refund was a mistake. Mann said that problems with the I.R.S. never interferred with fundrasing programs.

Circle in the Square was once a daring theatrical innovator during its downtown Off Broadway years and even after its move to larger quarters uptown. On Broadway, even with major stars appearing in productions, it fell onto hard times with what were perceived in the press as lackluster revivals and especially from competition from such new not for-profit kids on the block such as Manhattan Theatre Club and Roundabout Theatre Company.

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