  We analyse the canonical structure of AdS_3 gravity in terms of the coadjoint
orbits of the Virasoro group. There is one subset of orbits, associated to BTZ
black hole solutions, that can be described by a pair of chiral free fields
with a background charge. There is also a second subset of orbits, associated
to point-particle solutions, that are described by two pairs of chiral free
fields obeying a constraint. All these orbits admit K\"ahler quantization and
generate a Hilbert space which, despite of having $\Delta_0(\bar{\Delta}_0)=0$,
does not provide the right degeneracy to account for the Bekenstein-Hawking
entropy due to the breakdown of modular invariance. Therefore, additional
degrees of freedom, reestablishing modular invariance, are necessarily required
to properly account for the black hole entropy.
