The Crystal Cathedral megachurch is planning to propose a bankruptcy settlement which could be a win-win for both the debtor and its creditors. If approved, the bankruptcy plan could wipe out millions of dollars in debt, require the sell of its campus and famous soaring, glass-spired church to a real estate investment group with the opportunity for the church to eventually buy back some of its properties.
The church plans to lease back most of its core buildings under the plan, so worshippers and visitors won't notice any changes in services or outreach. The church's popular, decades-old televangelist program "Hour of Power" broadcasts will also continue, the church said.
The plan, which must still be approved by a judge, will erase the cathedral's $36 million mortgage and wipe out almost all of the $10 million in unsecured debt, including $7.5 million owed to vendors, Winthrop said. The deal would give the ministry a 15-year leaseback guarantee on the core church campus and a four-year option to buy it back at a fixed rate, he said.
It's this type of win-win planning that is often only possible in bankruptcy. When Crystal Cathedral attempted to settle its debt problems before filing bankruptcy it was forced to take "traditional" steps such as cutting back on employees and services; but there is only so much cutting you can do. If the church had continued to cut back, they would have eventually been forced to relinquish the very properties on which their ministry stands, with no opportunity to regain those assets. Because of the flexibility bankruptcy offers both creditors and debtors, Crystal Cathedral now has the opportunity to pay secured creditors, wipe out some debt and remain in their church so that they can continue to operate and bring in revenue.