The church tried raising money, establishing a committee from its roughly 3,000-family congregation to discuss debt restructuring and reaching out to its lenders to discuss options.
Last month, church officials report, Madison Park entered into an agreement with its lenders, where it would pay back the loan over the next 25 years — extending only a year past its initial payback date — via a Chapter 11 debt restructure, which it anticipates filing next month.
The new repayment plan is not dependent on the sale of the church’s properties. But if they do sell, that money could be applied toward paying down the loan.
“We didn’t do this to get out of debt or have it forgiven,” Simpson said, “But to get into a plan that assures all bond holders would be taken care of.”
Madison Park’s story is hardly new.
According to “Bankrupting the Faith,” a February research paper out of the University of Illinois College of Law and published in the Missouri Law Review, U.S. religious institutions filed for more than 500 petitions under Chapter 11 between 2006 and 2011, many because of outstanding debt, such as a mortgage taken out on real property.
“It’s a recurring thing,” said John Ledbetter, an accounting professor at Ball State University. “When the economy’s good, people, including businesses and church congregations, make plans for construction or expansion.”
The problem arises when loans come due and the borrowers can’t pay, he said. For example, Anderson’s Lindberg Road Church of Christ, which could now be moving from its building at 2625 Lindberg Road, after a bankruptcy court denied reorganization on a loan the church took out the same year as Madison Park.
As far as his church is concerned, Lyon said the future involves some belt-tightening, but that likely won’t impact the new worship center, staff, programs or contributions to Church of God Ministries, which operates worldwide, and whose roughly 2,200 U.S. and Canadian congregations are headquartered in Anderson.