ANDERSON — Madison Park Church of God officials say the church will file for a voluntary Chapter 11 bankruptcy reorganization, after coming up short for a $5.8 million balloon payment toward a loan it took out in 2007.
The initial loan was for nearly $17.5 million, to develop over 200 acres near exit 226 on Interstate 69, where the church had moved from Scatterfield Road. The money was used to fund construction of the church’s community life center, city streets, water delivery and storm water management infrastructure, said Senior Pastor Jim Lyon.
The loan was financed via a bond issue managed by a California firm, and called for $95,000 monthly payments, which escalated in the years leading up to a lump-sum balloon payment of nearly $6 million, due July 31, 2012.
”At the time, given our assets, the balloon payment seemed entirely possible,” Lyon said. The church planned to make the payment by selling off property it owns in Anderson — then valued at roughly $16 million, he said — including its old worship center, 2604 N. Scatterfield Road, and some of the undeveloped acreage around the new worship center, 6607 Providence Drive.
”The plans were in place for this to work,” said Clark Simpson, vice chair of the church’s board of elders. “But then, the economic conditions became a problem.”
Soon after the loan was issued, the U.S. economy began a nosedive into what’s now been dubbed the Great Recession. Unemployment soared to roughly 10 percent by late 2009 and real estate values declined. The value of the Madison Park Church properties was cut roughly in half, Simpson said, and none of the properties sold.
The church continued to make monthly payments, Lyon said, sometimes by cutting the budget for its missions and deferring maintenance. He said the church also reduced staff and benefits and froze some employees’ wages.
But that $5.8 million balloon payment was still looming. And in the year or so leading up to the due date, “We knew we weren’t going to be able to pay,” Lyon said.