OCTOBER 23, 2010 Crystal Cathedral's Cracks Show in Bankruptcy Filing
By TAMARA AUDI Wall Street Journal http://online.wsj.com/article/SB10001424052702304011604575565060738315760.html?mod=WSJ_Markets_RightMostPopular The Crystal Cathedral church in Garden Grove, Calif., filed for bankruptcy protection amid $48 million in debt. The church's filing lists 550 creditors. For decades, evangelist Robert H. Schuller's message of faith and positive thinking reached millions nationwide through his "Hour of Power" television show, broadcast from his towering glass church known as the Crystal Cathedral. Now, it is the church's financial woes that are reverberating across the country. Citing declining donations and $48 million in debt, Crystal Cathedral Ministries filed for bankruptcy protection this week, leaving a trail of hundreds of unpaid creditors from California to Washington, D.C. According to filings in U.S. bankruptcy court in Santa Ana, the Southern California church has 550 creditors with claims ranging from $2 million—owed to a Cincinnati-based bank that financed sound and stage equipment for the church's TV productions—to $200 owed to a Columbia, S.C., company that supplied ribbons and awards to the church's school. "It's frustrating. It's not going to break us, but we don't like to lose anything," said Bob Small, chief operating officer of Eagles Wings, a St. Cloud, Fla., clothing company that supplied the church with religious-theme neck-ties for its gift shop, and is owed around $2,000. Since 2003, Eagles Wings shipped the church neck-ties depicting the Nativity, and made ties especially for the church with an outline of its angular glass cathedral. Mr. Small's company also sold the church ties with Bible verses on them, but he chose to quote singer Gloria Gaynor instead of the New Testament: "Like she says, 'I will survive.' " How the 55-year-old church will survive is another matter. The ministry, founded by Mr. Schuller in 1955 in rented space at a drive-in theater, now owes $12 million to creditors and holds a $36 million mortgage with Farmers & Merchants Bank of Long Beach, Calif. The church was roiled by leadership changes after the abrupt departure in 2008 of Mr. Schuller's son as head pastor. Mr. Schuller's daughter, Sheila Schuller Coleman, now presides as pastor. Mr. Schuller, 84, preaches occasionally. "The period of unsettled leadership caused some...to leave the ministry, resulting in reduced revenue for an organization that exists primarily on donations," court documents say. The church's debts include $318,000 to the Lloyd Daniel Corporation, a consulting firm for non-profits in Pompano Beach, Fla; $147,225 to Lutzker & Lutzker, a Washington, D.C. law firm specializing intellectual property; $200,000 to Thomas Nelson Publisher, a religious publishing house; and hundreds of thousands to local TV stations around the country that broadcast "Hour of Power." Crystal Cathedral filed what is known as Chapter 11 petition, which generally allows a business to continue its operations while working out a plan to pay creditors. The church got permission this week from the court to continue to pay 190 part-time and full-time employees. Church leaders have said services and the TV show will continue, though the annual Christmas pageant is in doubt. The Schuller family has promised to pay its creditors—many of them small Christian-themed publishing houses and gift manufacturers facing their own struggles as churches across the country see their donations decline. "There have been a lot of tears shed over this," said Marc Winthrop, the Crystal Cathedral's bankruptcy lawyer. "They're going to do everything in their power to get these people repaid...They believe that's the Christian thing to do." Church lenders say congregations nationwide are experiencing difficulties meeting expenses as the floundering economy has dried up donations. "We certainly have more church borrowers that are struggling than we have ever experienced," said Mark Johnson, executive vice president of the Evangelical Christian Credit Union, which specializes in church lending. Mr. Johnson's credit union has had to foreclose on a few dozen churches in the past two years, he said. Mr. Winthrop said the church was prompted to file for bankruptcy protection after a few creditors filed lawsuits and "writs of attachment" in court to compel the church to pay them back more quickly. The church's debt underscores the elaborate style that came to define the Crystal Cathedral, often cited as progenitor of the American mega church. For example, holiday pageants featured live animals, hundreds of performers and live music. "They had the top choreographers come in and work with the dancers, the top make-up artists too," said Joe Branam, owner of Branam Enterprises in Compton, Calif., which builds stages for rock concerts and movies and did work for the church. "I'd say the Christmas show in many ways could be more elaborate than a KISS concert." Mr. Branam, listed as a creditor, said the church might owe his company a few hundred dollars for rental equipment. Until recently, he said, the church has been "just excellent with paying us." As Crystal Cathedral grew to include services in Spanish and Arabic, a high school, self-help counseling, youth groups, a sleek visitors' center and a cemetery, it accumulated outsize expenses. The majority of its money came from donations. In 2009, Crystal Cathedral saw its revenue fall 29% to $18.8 million from $26.6 million in 2008, according to court documents. Church leaders note that giving has increased in 2010, but expenses still exceed revenue. The "Hour of Power" often features popular Christian musicians and singers—including Chris Sligh, a former "American Idol" contestant. Mr. Sligh is listed as a creditor, though a representative of Mr. Sligh's management company said that the church doesn't owe Mr. Sligh money. The church's style may seem extravagant, but it brought worship to life, said Brett Judson, a member who is listed as a creditor for pipe-organ performances. Pageantry, he said, "is something the congregation wants. All the musical and dramatic outlets are a way to open people up to a positive Christian message." Mr. Judson, a music student at the Yale School of Music, says he does not want any money from the church, which taught him to play the pipe organ. In a sermon this year, Mr. Schuller talked about the church's future. Wearing his familiar lavender robes and gold medallion, his white hair swept back, Mr. Schuller told the congregation the church's survival "depends upon new people joining, making commitments and becoming members of this ministry by their financial support. And I need the help today like I needed it that first Sunday." -- ======================================== George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu _______________________________________________ Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
