GARDEN GROVE, Calif. (AP) — Crystal Cathedral, the megachurch birthplace of the televangelist show “Hour of Power,” filed for bankruptcy Monday in Southern California after struggling to emerge from debt that exceeds $43 million.
In addition to a $36 million mortgage, the Orange County-based church owes $7.5 million to several hundred vendors for services ranging from advertising to the use of live animals in Easter and Christmas services.
The church had been negotiating a repayment plan with vendors, but several filed lawsuits seeking quicker payment, which prompted a coalition formed by creditors to fall apart, church officials said.
The church, founded in the mid-1950s by the Rev. Robert H. Schuller Sr., has already ordered major layoffs, cut the number of stations airing the “Hour of Power” and sold property to stay afloat. In addition, the 10,000-member church canceled this year’s “Glory of Easter” pageant, which attracts thousands of visitors and is a regional holiday staple.
The “Hour of Power” telecast, filmed in the cathedral’s main sanctuary, at one point attracted 1.3 million viewers in 156 countries.
Church leaders said the telecast and Sunday services will continue while in bankruptcy.
Crystal Cathedral files for bankruptcy protection
The church decided to file for Chapter 11 after some of its creditors sued for payment, according to church officials.
Hundreds of creditors could be owed between $50 million and $100 million, according to documents filed in U.S. Bankruptcy Court in Santa Ana on Monday.
“Our ministry will continue as usual,” said Senior Pastor Sheila Schuller Coleman, speaking under an overcast sky Monday afternoon at the church’s sprawling 40-acre Garden Grove campus. She said that if anything, the recent troubles will give the church’s messages more meaning.
The church was started by the Rev. Robert H. Schuller in a rented drive-in movie theater in 1955 and came to prominence through the “Hour of Power” television show. But in January, faced with a $55-million budget deficit and a 27% drop in revenue over the last two years, it eliminated some of its signature offerings and sold property.
In 2006, Coleman’s brother, Robert A. Schuller, succeeded his father to head the ministry. But by fall of 2008, the father and son decided to part ways in a messy family dispute. Last summer, the elder Schuller told congregants that he would return to a prominent role at the church for two years and that his daughter would be his co-leader. Some said the dispute was a disappointment for congregants, who expected consistency.
Crystal Cathedral blames a few creditors for bankruptcy
Senior Pastor Sheila Schuller Coleman said in a statement Monday that the bankruptcy filing was a necessity because a small number of creditors chose to file lawsuits and obtained court-ordered writs to attach the church’s bank accounts and assets in an attempt to get paid right away.
“For these reasons, the Ministry now finds it necessary to seek the protection of a Chapter 11,” she said later at a press conference.
A committee of creditors that was working with the church for the last six months declared an impasse last week, foreshadowing the bankruptcy. Jim Penner, a church board member and Schuller’s son-in-law, said the cathedral’s intention is to repay all vendors 100 percent.
He said the church’s debt as of Monday is about $44 million.
The church’s budget woes have forced it to lay off 140 people in a little over a year, cut 50 percent of its Hour of Power air time and even send home its orchestra and professional choir singers. The church now has a choir made entirely up of volunteers, Coleman said.
Penner, executive producer of the “Hour of Power” and teaching pastor, said the Chapter 11 may not have been necessary had a few creditors worked more patiently with the church.
“A few didn’t want to play ball,” he said. “They tried to get ahead of the others. It became difficult for us to hold the coalition of vendors together.”
Oliver, who was also on the committee of creditors, said the church, at the end of the 90-day moratorium, offered the creditors 30 percent of what they were owed over five years.
“We saw their financial documents,” she said. “They had the money to pay us 100 percent over five years. We refused to accept it.”
Oliver said Penner came up with one more offer Friday after realizing that negotiations were at a standstill.
“He offered to pay us 100 percent over the next 12 years,” she said. “What kind of an offer is that?”
When the creditors declined that offer as well, the Cathedral filed Chapter 11 right away, Oliver said.
“Based on what I have observed in this time, the church intended to file bankruptcy from day one,” she said. “This was their way of buying time.”
Crystal Cathedral, creditors at $7.5 million impasse
Crystal Cathedral vendors and what they’re owed