CRYSTAL CATHEDRAL FILES FOR BANKRUPTCY PROTECTION

CRYSTAL CATHEDRAL, the mega-church founded by Rev. Schuller based in Garden Grove in Orange County filed for bankruptcy protection this week. The church is well-known for four things, its huge structure that is totally made of glass, its ‘Hour of Power’ TV program, and the 2 spectacular Las Vegas type shows on Easter and Christmas called the ‘Glory of Easter’ and the ‘Glory of Christmas.’ Both shows are live-action pageants that tell the story of Easter and Christmas with flying angels, live animals that include a parade of camels, sheep, horses and donkeys performed inside the magnificent architectural work of glass that is the church itself. Tickets for the shows are very cheap at $20 to $45 compared to equivalent Las Vegas shows that cost over $120. I had the opportunity of watching the ‘Glory of Christmas’ 20 years ago. Indeed, it was spectacular and impressive for a bargain price.

 The first signs that the CRYSTAL CATHEDRAL had serious financial problems came out in January of this year when the church announced that it was cancelling the ‘Glory of Easter’ this year. Then it shuttered its facility in Capistrano used for retreats and weddings laying-off 50 employees there. Thereafter, the church sold the Capistrano property which was donated by a couple to the church, for $22 million in May. Previously, church officials announced the ‘Hour of Power’ will go dark in several local stations in the country. At that time, the church said that the program viewed by millions worldwide saw a 30% drop in income since January 2009. In 2008, the program already experienced a decline in revenue from 2007 to 2008 of almost 20%. Hence, the program has suffered a 50% decline in revenue or income between 2007 and now. Faced with a shortfall of $55 million in its budget and declining revenues, the church decided to cut costs and sell assets. Unfortunately, cost cutting and asset sales were insufficient and not fast enough to keep creditors of the church happy. The animal supplier who supplied camels, horses and sheep is owed $50,000 and the wardrobe manager is owed $11,000.

The church decided to file for Chapter 11 bankruptcy reorganization after some of its creditors sued for payment of unpaid bills and obtained writ attachments to garnish the bank accounts of the Church. Hundreds of creditors could be owed between $50 million to $100 million according to documents filed in bankruptcy court in Santa Ana. Its largest creditors are television stations. Further, the church owes $7.5 million to unsecured creditors and has a $36 million mortgage on its 40 acre property in Garden Grove. The church estimates that it has assets of $50 million to $100 million. Since the church started experiencing financial problems, it has laid-off 140 people in the past year, cut its ‘Hour of Power’ air-time in half and has even dismissed its orchestra and professional choir singers. The choir is now made up entirely of volunteers.

It appears that the recession has not spared the CRYSTAL CATHERAL and has succumbed to too much debt. Faced with declining revenues and too much debt because of extravagant expenses, the church had no choice but to follow the yellow brick road travelled by GM and Chrysler and had to knock on the doors of bankruptcy court for protection from creditors. The bankruptcy is bad news for unsecured creditors of the church. Unsecured creditors have no priority in bankruptcy with respect to other creditors. They always end up with nothing or close to nothing. The animal supplier may end up getting paid with camel dung and the wardrobe manager may end getting paid with a flying angel. Secured creditors have nothing to worry about because they have the church’s property as collateral. The animal supplier was recently heard complaining that he should have shipped the camels to the mosque near ground zero because the Imam was offering to pay him cash in advance and he heard that the mosque was well-funded.

 Lawrence Bautista Yang is a graduate of Georgetown University Law Center and has been in law practice for thirty years. He specializes in bankruptcy, business and civil litigation and has handled more than four thousand successful bankruptcy cases in California. He speaks Mandarin and Fujien and looks forward to discussing your case with you personally. Please call (626) 284-1142 for an appointment at 1000 S Fremont Ave Bldg A-1 Suite 1125 Unit 58 Alhambra, CA 91803.