The Herald Bulletin

Afternoon Update

Opinion

May 11, 2013

Editorial: Church’s bankruptcy serves as lesson to all

The best tales from a pulpit or courtroom involve moral dilemmas and challenges.

Take the case of the Lindberg Road Church of Christ and the U.S. Bankruptcy Court. The eastside congregation made a poor business decision to obtain a bank loan and had to file for bankruptcy in Indianapolis. The court recently looked at payment plans from both sides but decided in favor of the bank. The church might have to close.

The original church congregation started in 1957 as the Hillcrest Church of Christ and began Anderson Christian School in 1976. They broke ground on a Lindberg Road site in 1978 and in 1980 became the Lindberg Road Church of Christ. The school is next door.

Realizing the need for recent growth, the church obtained a $2.5 million loan to add a child care facility and remodel the school. The loan, however, was backed in part by insurance policies taken out on elderly parishioners with their permission. The death benefits on those so-called “Life Legacy” policies — or their sale on a secondary market — would back the $2.5 million line of credit through Star Financial Bank to fund the expansion and remodeling. The church tried to sell the policies through Total Financial Group in 2009, but was told there was no market for them.

The church fell victim to a loan scam that cannot pay off for small congregations and it’s chancy for larger ones.

The church and the bank offered plans to Judge Frank J. Otte; the church lost on April 22 when Otte denied its plan. Adding insult to injury, the judge wrote, “The Court suggests, as difficult as it might be, that this Debtor accept the consequences of its financial decisions and not look for blame as an escape from dealing with negative fallout of those decisions.”

Otte noted that he was “sympathetic” to the circumstances that existed for the church and school. He urged both sides to work toward resolving payment.

A few months ago, Pastor Ryan Smith likened the congregation’s plight to Jonah in the belly of a whale. He indicated a physical relocation may be coming but prayed for a strong congregation.

First, no church or not-for-profit should enter into a loan agreement relying on whether its worshippers, or patrons, die. Unfortunately, other Indiana churches used the same plan. They were watching — praying for — the outcome of the Lindberg Road case.

Hope and charity, however, are not in a federal court’s vocabulary; signed contracts are revered more than gospel. Otte’s denial of the church’s bankruptcy plan is understandable though it rubs the congregation’s misstep back in its face. Like so many church experiences, Lindberg Road Church of Christ’s dilemma is a lesson not only in financial planning but in faith.

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