Crystal Cathedral Ministries, an Orange County landmark and megachurch founded by television evangelist Robert H. Schuller, filed for Chapter 11 bankruptcy Monday morning.
The cathedral owes about about $7.5 million to unsecured creditors. The bankruptcy filing seeks court protection from its creditors.
In a statement issued Monday, Senior Pastor Sheila Schuller Coleman said the bankruptcy filing was a necessity because a "small number of creditors chose to file lawsuits and obtained writ of attachment."
She said the cathedral also had no choice because a committee of creditors decided not to extend a moratorium to allow continued talks about a payment plan.
"For these reasons, the Ministry now finds it necessary to seek the protection of a Chapter 11," she said.
The Cathedral, which has been a landmark and a tourist attraction with its glistening glass tower, is now faced with $55 million in debt because of the economy and dwindling contributions.
The church's budget woes have forced it to downsize its staff, cancel programming in certain markets, and even send home choir and orchestra members.
A committee of creditors who were working with the church for the last six months declared an impasse, foreshadowing the bankruptcy. Church board member and Schuller's son-in-law, Jim Penner, said Friday that the cathedral's intention is to repay all vendors 100 percent.
Among the long-time vendors for the "Glory of Christmas" pageant still waiting to get paid are Oliver, who supplied camels, horses and sheep for the pageant; wardrobe manager Juliet Noriega; dry cleaner Bruce Johnson, who cleaned the actors' costumes; props manager Sharon Crabtree, and Carin Galletta, whose public relations firm provided publicity for the pageant.
At least two creditors, including equipment financing company PNCEF LLC., have sought and obtained court-ordered writs of attachment.
A writ of attachment is a remedy under California law that allows a creditor to assert a lien on the debtor's assets until a judgment is delivered by the courts. Obtaining such a writ basically helps an unsecured creditor to elevate their status to a secured creditor during this waiting period. There is a risk that "attaching" the debtor's assets may hasten bankruptcy. If bankruptcy is filed within 90 days after the writ is levied, the attachment lien terminates automatically and the creditor goes back to unsecured status.
Coleman said in the statement that she is optimistic the church will come out of these trying times, saying that the ministry is experiencing its best cash flow in 10 years.
Oliver said Monday that she was surprised at the cathedral's sudden bankruptcy filing. She said Penner's statements in the Register Friday that he intended to pay back all the vendors 100 percent, even with a bankruptcy filing, had given her a glimmer of hope.