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."
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