Quantcast

Bankruptcy judge rejects Charles Street AME church’s repayment proposal to OneUnited Bank, creditors

Howard Manly | 10/9/2013, 11:46 a.m.

Those often embarrassing activities and questionable accounting practices became public during bankruptcy hearings last summer in which Charles Street Pastor Gregory Groover admitted that he had diverted $875,000 in money restricted for use to a pastoral program funded by the Lilly Foundation to pay for the church’s operating costs.

Despite those diversions, the church was unable to pay its bills, including utilities and insurance. Bailey wrote that its accounting practices “have left something to be desired.”

“While the church is entitled to its own standards for its own internal purposes — the court and creditors are entitled to more reliability and clarity,” Bailey wrote.

“ Therefore, especially as Charles Street’s cash reserves have dwindled to nothing, it would be useful for an examiner to review Charles Street’s monthly operating revenues going forward.”

The church is not without assets. The historic church building is valued at $1.3 million. The nearby church-owned storefront properties are valued at $400,000 — despite their deteriorating condition. In addition, the church owns a house in Milton valued at $380,000 and its old parsonage building and parking lot are valued at $290,000.

The uncompleted Renaissance Center is valued at nearly $2 million.

But as Judge Bailey pointed out repeatedly in his decision, the church is saddled with excessive debt. In addition to OneUnited, Charles Street owes about $630,000 to Thomas Construction Company, the Dorchester firm hired to build its proposed Renaissance Center. Another $450,000 is owed to Tremont Credit Union for a loan to repair the church’s roof.

The majority of Charles Street’s debt is owed to OneUnited, the nation’s largest black-owned bank.

The $3.6 million construction loan became due on June 1, 2008, and despite a total of five extensions, the church was unable to satisfy its debt by Sept. 1, 2009. A year later, on Aug. 17, 2010, OneUnited sued in Suffolk Superior Court for breach of contract. Also named in the suit was Charles Street AME’s co-signer, the First District Church.

Charles Street had also borrowed another $1.1 million, separate from the $3.6 million construction loan. That loan is also in default. To forestall foreclosure, Charles Street later filed for bankruptcy protection.

Melvin B. Miller, Editor, is a member of the Board of Directors of One United Bank.