Bankruptcy

Mega Church Files Bankrutpcy

By mcbride

Sagging under the weight of 43 million dollars in debt, the Crystal Cathedral has filed for chapter 11 bankruptcy (reorganization).  The filing marks the economic downturn’s invasion into the mega church arena.  Over the years, small churches have had economic trouble from time to time and the main issue with those work outs has to do with the lender’s public image: no one wants to foreclose on the local church.  So, lenders have been known to do a private work out to avoid a public foreclosure, or a work out whereby another solvent church moves into the building and takes over the debt service, or as a last resort, sell the debt to another entity which has no similar public image issues.  At any rate, given the economy and the number of large churches carrying large debts, this filing surely will not be the last for the mega churches. 

“Worldwide mega church Crystal Cathedral Ministries, founded by the Rev. Robert H. Schuller, Sr., during the 1950s, filed for Chapter 11 protection in U.S. Bankruptcy Court in Santa Ana, Calif.   The church became an international televangelist sensation for its ‘Hour of Power’ broadcast, and is now bogged down with more than $43 million in debt for mortgage and overdue payments to hundreds of vendors.  According to reports, the church had been attempting to work out payment plans with the vendors to which it owes more than $7.5 million. The Garden Grove-based church also owes $36 million on its mortgage.”

Here is a link: http://www.nptimes.com/10oct/10192010.html

Michael

Full post as published by Texas Lawyer Blog on October 20, 2010 (boomark / email).