Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, July 25, 1995 TAG: 9507250076
SECTION: BUSINESS PAGE: B6 EDITION: METRO
SOURCE: By MAG POFF STAFF WRITER
DATELINE: LENGTH: Medium
The church, formerly named Berean Baptist, filed for reorganization and protection from creditors in 1988. The church's governing board and membership voted Saturday to submit the plan that would repay a portion of the debt incurred under previous leadership.
The congregation's bankruptcy attorney, A. Carter Magee Jr., said the plan filed with U.S. Bankruptcy Court for Western Virginia is the only way creditors will receive any return on their investment and the only means to avoid liquidation of the church's buildings and property on Dalewood Avenue. The plan, if accepted, would remove the church from the court's supervision.
Lakeside Baptist has undergone a reorganization since 1990. Attendance has grown and offerings have increased, said the church's clergyman, Art Hearne. But the debt has been spiraling because payments couldn't cover interest.
Hearne became the pastor in 1990, and most of the current members joined the church since them.
"The only thing the two churches have in common is the buildings and property," Magee said. "The current church is trying to solve problems inherited from another time in the best possible way."
He said the church is moving forward although the financial burden from the past is heavy.
"This plan is predicated on necessity. The debt load was increasing dramatically and the church property was deteriorating," Magee said. "While the plan will not please everyone, it is the best option open to the church."
The plan sets up five classes of creditors with different repayment plans:
nClass 1 is composed of small investors who bought Berean Baptist Church bonds and savings certificates of $1,000 or less each. These claims total $58,000, and the plan calls for repayment of 10 percent, a total of $5,800.
nIn the second class is Crestar Bank, which has a secured claim for $200,000. The bank will be repaid $5,500 a month on two loans for full payment by 2000.
nClass 3 is Christian Training Foundation, a Minnesota corporation which has an office in Charlotte, N.C. It has a secured claim of $2 million. Magee said the foundation has agreed to accept $1.2 million in small increments without interest over 22 years. The evangelistic organization will receive $500 a month until Crestar is repaid, when payments will rise to $6,000 a month. The foundation's acceptance of the lesser payment without interest, in return for a third lien on the church property, made the entire plan possible, Magee said.
nThe fourth group consists of general business creditors who are owed a total of $43,000. They are being asked to accept 10 cents on the dollar, $4,300 in total.
nA fifth class is composed of holders of bonds and savings certificates worth more than $1,000 each. The church proposes to pay 10 percent of the $100,000 claim, $10,000, at a rate of $500 a year over 20 years.
Magee said many of the bondholders also are members of the church who voted in favor of the plan Saturday night. He said some investors may consider donating their debt and receiving possible tax deductions.
He expects the plan to be heard by the court in about 60 days.
Magee said it would have been cheaper, easier and quicker to walk away from the debt, but the congregation wanted to fulfill its obligations. "The membership feels it is shouldering all the burden it can and believes this plan will be successful," Magee said.
Berean Baptist Church was founded in 1970 and grew quickly to about 800 members. After widely publicized financial difficulties in the late 1980s, the church changed its name and reorganized.
by CNB