Rotting roots is absolutely normal when transferring plants to S/H. When roots grow, they grow tailored to the environment that are in. A root that grows in a dry mix, like bark, can't adapt to the overly wet S/H. That's why it's so important to repot orchids into S/H when there is brand new root growth (not just new green tips on existing roots). As those roots grow into the Leca, they will grow in a way that they are suited to all that wetness.
Are there any new roots on your phals? If there are, you could try putting the pot in plant in a clear bag to maintain humidity while the roots grow. If there are no new roots, then I'm not too sure what options you have.
Have a look at this website for some detailed information on S/H.
All about Semi-Hydroponics