INDIANAPOLIS — A meeting of creditors in the Madison Park Church of God Chapter 11 bankruptcy case was held Tuesday.
No creditors showed up at the hearing, which was held at the U.S. Courthouse on East Ohio Street in Indianapolis, but that was expected, said debtor attorney Jerry Ancel.
The purpose of the meeting was to lay out a plan for how the church will repay its creditors at A and B levels of priority. The next step, according to Ancel and church business administrator Fred Spaulding, is to hear a vote from the creditors, who will either approve or deny the proposed plan.
Church officials said in June they were filing for voluntary Chapter 11 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.
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.
But as Ancel confirmed on Tuesday, shortly after the loan was issued the U.S. economy took a nosedive into one of the greatest downturns in the country's history, and the value of real estate plummeted. According to church officials, the value of the properties was cut roughly in half and none of them sold.
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.
Ancel broke the repayment plan into A and B bond holders, depending on the risk the creditors took when they agreed to finance the church. He said the A bond holders will received payments and interest upon commencement date of the plan. It contains fixed monthly payments and is expected to be paid back within 20 years.
According to Ancel, B bond holders are theoretically "out of the money." They agreed to a higher risk loan which is subordinate to the A bond holders and therefore won't see any payments until the A holders are restored. It's possible B bond holders might not be restored.
Ancel said the next court hearing, which will include creditors or their agents, will feature the vote on whether or not to approve the repayment plan. That hearing could be as early as September, but isn't scheduled yet.
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