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Crystal Cathedral to be sold as a way to exit Chapter 11 bankruptcy

Faced with decreasing revenues, the Garden Grove megachurch filed for bankruptcy protection in October. Worship services and outreach programs would not be affected by the reorganization, a spokesman said.

May 27, 2011|By Nicole Santa Cruz, Los Angeles Times
  • Under the proposed plan, the 40-acre campus would be sold to a real estate investment group. The church has an option to lease the campus for 15 years.
Under the proposed plan, the 40-acre campus would be sold to a real estate… (Anne Cusack / Los Angeles…)

The Crystal Cathedral, the gleaming architectural landmark in Orange County that has been a Southland attraction for decades, will be sold as a method of exiting Chapter 11 bankruptcy and reconciling millions in debt, church officials confirmed Thursday.

A reorganization plan could be filed in a Santa Ana court as early as Friday.

The Garden Grove megachurch, founded by Robert H. Schuller, was also the birthplace of the enormously popular weekly televangelist series "Hour of Power." But faced with decreasing revenues over the last few years, the church filed for bankruptcy protection in October, saying it owed more than $50 million to creditors, including vendors who assisted in the church's famed Christmas and Easter services.

Worship services and community outreach programs would not be affected by the reorganization, church spokesman John Charles said.

Under the proposed plan, the 40-acre campus would be sold to a real estate investment group, which alleviates financial pressure from a $36-million mortgage, Charles said. He would not divulge the sale price or the investment group.

The church also has a guaranteed option of leasing the campus for 15 years. After four years, the church can buy back the core portions, including the 10,000-pane cathedral, the 13-story Tower of Hope, the welcome center and the cemetery.

"It's great news," Charles said. "It gives us the opportunity to pay everybody off and start fresh."

The only building the church cannot buy back is the four-story Family Life Center on the campus, said Marc Winthrop, a bankruptcy lawyer for the church. The center is already for sale.

The plan, which could be approved at a June 1 bankruptcy court hearing, will allow the cathedral to repay more than 550 creditors in the next 42 months.

Since filing for bankruptcy, the church has been mired in controversy. Financial documents related to the case revealed generous pay and tax allowances for cathedral officials. Then, in March, choir members were outraged after being asked to sign a sex covenant some perceived as anti-gay.

Under Schuller's leadership, the church saw great success, growing from the Garden Grove Community Church in 1955 into a megachurch that won over millions of faithful with his message of the power of positive thinking.

Schuller stepped down in 2006 and handed the reins to his son, Robert Anthony Schuller. But by the fall of 2008, discord prompted the younger Schuller to resign. Sheila Schuller Coleman, the founder's daughter, stepped up to the senior pastor position in 2009 but has not been fully embraced by the congregation.

"We are pleased that we are able to honor the debt that we have incurred and to honor the creditors who are due their payment," Schuller Coleman said in a statement. "We are thankful to the vendors for their patience and we are so sorry for any pain that they have incurred. To pay them back 100% has always been a top priority and we are grateful to God for providing the resources to be able to do just that."

Church officials are hailing the plan as the first step in getting the cathedral on solid financial footing to "launch forward with a bold new vision from Pastor Sheila."

Charles did not say what that vision would be.

Paul Loredo, who was an orchestra member for 25 years, said that no matter what, the damage has been done to the church's reputation. The church still owes him about $1,500 for performances.

Church leaders, he said, "could make a couple steps forward, but they've made so many steps backward that I don't see that happening."

Under current church leadership, which also includes Coleman Schuller's sisters and husband, a new vision is unlikely to succeed, he said.

nicole.santacruz@latimes.com

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