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More details are coming out about events leading up to the shutdown of Seattle’s Balagan Theatre. The popular company, which specialized in new and contemporary musicals, surprised many in the local arts community — and drew national interest — with a Sept. 24 announcement that it was deep in the red and suspending operations permanently.

Initially, Balagan board of directors President Jim Griffin said he and fellow trustees did not have enough information to know the extent of the nonprofit company’s indebtedness to individuals and organizations.

Now Griffin says he can estimate that Balagan amassed unpaid bills of at least $340,000. Vivian Phillips, Seattle Theatre Group (STG) marketing and public-relations director, acknowledged that Balagan owed substantial sums to her organization for three shows Balagan presented at STG’s Moore Theatre, but STG is writing off the debt.

Griffin said he is “grateful for STG’s generosity, but even discounting the write-off, the figure owed is still quite shocking. We’re still looking at over $250,000 [of debt].”

Among other creditors are performer Jerick Hoffer (also known as performer Jinkx Monsoon), owed back pay as the star of Balagan’s staging of “Hedwig and the Angry Inch” at the Moore, and Contemporary Classics, which co-produced “Next to Normal” with Balagan at the company’s former venue, the Erickson Theatre on Capitol Hill.

Based on media reports and conversations with numerous people close to Balagan, a picture emerges of an artistically ambitious but haphazardly managed theater group, with insufficient financial planning and oversight.

Griffin and Balagan co-founder and former manager Jake Groshong both say debts began piling up for the 8-year-old company in 2013, after Seattle Central College, which owns the Erickson, reclaimed the building for its own uses.

At the Erickson, Balagan relied mainly on ticket receipts, bar concessions and rentals of the space to other theater troupes for income. The small staff did not include a development director or anyone else actively pursuing the kind of government, foundation and individual grants many nonprofit theaters seek to help cover their costs. The Balagan board was without a treasurer for several months this year.

“We always made money on our shows,” said Groshong, “and never really pushed the fundraising. We needed to do that, but unfortunately it didn’t happen.”

Meanwhile, buoyed by earlier critical and box-office successes of dynamically staged shows like “Avenue Q” and “Spring Awakening,” featuring some of Seattle’s prize musical-theater talent, Balagan forged ahead to mount co-productions at much larger outside venues, including the Moore Theatre, Seattle Repertory Theatre and Seattle Musical Theatre.

Expenses for the shows, which employed more actors and others under union contracts, ballooned. Reviews were mixed for some productions, and ticket sales disappointing.

Griffin says the board kept asking for financial reports, but Groshong and other staffers were not providing them. Groshong acknowledges that he, too, was unaware of exactly what the company’s finances were.

“We had a very part-time bookkeeper who worked about five hours a month,” he said.

As the financial situation worsened, Groshong and artistic director Louis Hobson deferred salary payments. They also made Balagan a joint personal loan of $40,000 (now part of the company’s debt), and planned fundraising benefits.

The two stepped down from their posts in July, turning over management duties to new head staffer Danielle Franich. The men said they did so to save Balagan overhead and devote themselves to finding commercial backers for their new for-profit organization, Indie Theatricals.

The idea, according to Hobson, was to use private investment funds to underwrite workshops and premieres of new musicals Balagan would present, including two announced for the 2014-15 season (“Citizen Ruth” and “Make Me Bad”).

Griffin said the board raised about $71,000 over the past year for Balagan, including about $20,000 from a private benefit. But he notes that “considering the overwhelming amount of debt [we just uncovered], there wasn’t much we could do” to save the theater. The board is currently filing papers to officially dissolve the organization, and according to Griffin, “coming up with a plan to distribute whatever assets we have and work with our creditors.”

Asked what he might have done to prevent Balagan’s collapse, Groshong responded that “In hindsight, after we left the Erickson, I would have [ …] said, ‘Hey, we’ll spend this year raising money and come back strong the following year.’ ”

But that path was not taken.

Misha Berson: mberson@seattletimes.com