Chapman University offered Tuesday to purchase the Crystal Cathedral campus for $46 million as part of a proposal that would allow the bankrupt church to lease back its core buildings and repay debts sooner than the initial exit plan put forth two months ago.
A draft of the school's offer, backed by the church's creditors committee, was filed in Bankruptcy Court in Santa Ana, along with a motion to end the church's exclusive right to present a plan.
The Garden Grove megachurch, founded by Robert H. Schuller, is about $50 million in debt. It filed for Chapter 11 protection in October.
The latest offer, which was approved by Chapman's board of trustees at its June 27 meeting, would save the church $3.6 million over two years through a lower-priced leaseback arrangement and would repay creditors in full as soon as the sale is complete, rather than over a two-year period.
Chapman plans to use portions of the property as a satellite campus, possibly for a health sciences center, said school President James L. Doti.
The offer is consistent with the Crystal Cathedral's vision "of hope and ambition," he said. "I like to think those are the same characteristics that we have here at Chapman University."
Marc Winthrop, the church's bankruptcy lawyer, said the Crystal Cathedral board would consider Chapman's offer sometime soon, possibly along with other expected offers.
The initial reorganization plan, filed by the church in May, calls for the sale of the campus for $46 million to Greenlaw Partners, an Orange County-based real estate developer, which would turn portions of the property into apartment buildings.
Under that plan, the church would be allowed to lease back its core buildings for $212,000 per month. The Family Life Center, which houses a school and production offices, would be leased back for $95,000 per month for two years.
In Tuesday's filing, the creditors committee argues that Chapman's offer is more realistic because it would allow the church to lease back its core buildings for $150,000 per month and the Family Life building for $65,000 per month for two years.
In addition, the church could repurchase the core campus for $23.5 million, compared with $30 million under the Greenlaw proposal.
The creditors also warned that if insiders or family members vote to reject the Chapman offer, the committee will file formal objections to more than $2 million in claims made against the church. It also will attempt to recover a distribution to Schuller's pension trust stemming from the May 2010 sale of the church's Rancho Capistrano property.
On Tuesday, the church also filed a motion to approve bidding procedures, stipulating that Greenlaw, as the initial bidder, would be entitled to 2% of the purchase price if outbid. It also detailed procedures for the sale of the church's $1-million condominium in Laguna Beach. A hearing on the matter is scheduled July 12. A hearing on the exclusivity motion is set July 26.
Winthrop said that in the time since the original offer was made by Greenlaw, "a number of different parties have come forward to express interest, Chapman among them."
"Of course, the board is going to consider all the offers that come in," he said. "As has been announced, this is an open process."
Winthrop declined to identify those parties, except to say they include a potential donor who might offer to "write a big check," he said, and pay off the Crystal Cathedral's debt.
He sees a downside in Chapman's offer, however, in that the ministry would lose access to the building it calls the Welcome Center, which houses a bookshop, cafe and a museum tracing the history of Schuller's career.
"So it's a question of how important the board deems the Welcome Center to be, whether they consider it integral to the core Crystal Cathedral campus or whether it is expendable," Winthrop said.
The church is not only suffering from financial problems, but also has been weighed down by family strife.
In 2006, Schuller stepped down from the pulpit and his son, Robert Anthony Schuller, took over. Two years later, the younger Schuller resigned, and, in 2009, his sister, Sheila Schuller Coleman, became senior pastor and remains in that position.
When the church filed for bankruptcy it cited a drop in donations and a "period of unsettled leadership that caused some in the congregation and viewing audience to leave the ministry."
Doti said he began thinking about the possible purchase of the Crystal Cathedral site when the church filed for bankruptcy but did not seriously pursue a plan until two months ago. School representatives then approached the church's creditors committee with the plan.
Doti said he also met with Robert H. and Arvella Schuller last week to discuss the offer.
"It's a complicated decision," Doti said. "It's not only Dr. Schuller and Arvella, it's the board of directors."
