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| Why did we loan all that money out with no repayments? |
| Michael Schutz (Michaelschutz) New member Username: Michaelschutz Post Number: 1 Registered: 5-2018 |
Hi all, I'm a pastor in LCC. I poke my head in here from time to time to read a little bit of the goings-on, but haven't been compelled to enter into discussion until now. I'm a member of the LCC District in question, and can tell you much of the very long story, but I'll make that very long story very short for now in hopes of answering the original question, at least a little bit. In January 2015, we found out by letter from our District President that the District's Church Extension Fund was essentially insolvent. It was described as a "cash flow shortage" and so all further deposits and withdrawals were frozen at that point while it began to be sorted out. We came to learn that there was almost $100 million deposited in CEF, that the assets were at that point valued at somewhere around $50 million, and that there was no indication that the situation could be improved. We learned there was one project that had been going on for the last 25 or so years that comprised the vast majority of the portfolio - a church, school, and seniors housing project in Alberta. Tens of millions had been lent over the years, and virtually nothing had been paid back, not even interest. This wasn't the only project that had been having trouble with repayments, but because of the size of it and because it was such a large percentage of the fund (and because the CEF was not its own legal entity but a component of the District as a corporation) its problems essentially caused the whole District to collapse financially. Over the past 3 years, all CEF loans have been called in - even those in good standing. All District assets are being sold off; not just CEF properties but everything, including the offices. District staff has gone from about 12 to 2. Depositors have collectively lost millions, though efforts are underway to recover as much as possible, including this big project being turned into a corporation with the depositors as shareholders. It's possible that depositors could gain all their deposits back with the promised interest, but that could be decades away, and with so many elderly depositors, the mandate for this new corporation is to get it ready to sell and sell it off as quickly as possible. In short, it's a huge mess. The situation has been described by District leadership as "erring on the side of ministry", and as you might imagine, there's been the whole gamut of reaction to that, from essentially agreeing with that all the way to a class-action lawsuit that is now also underway against the District leadership. In terms of restructuring, there are two types of restructuring going on right now. Firstly, the District has been under court-ordered protection for the last three years (technically, it's not bankruptcy) so that the assets of the District can be sold off and as much as possible can be returned to depositors. This has been managed by a court-appointed firm. Concurrent to all this, LCC as a Synod, with our 3 Districts, has been undergoing a Synodical restructuring. In my opinion, our District's CEF situation was the catalyst for this actually happening, but the idea had been under discussion for many years (really, ever since the founding of LCC in the late 1980s). Again, opinions vary widely as to the specific need and the specifics of the solution we've adopted, but we are working through it. The financial/business side of this is bad, of course, but the spiritual implications have (and will continue to be) massive as well. When it's church leadership that breaks a trust like this, the spiritual implications are even a bigger deal than the civil ones, in my opinion. Of course, there's much, much more to the story, but I hope that gives some clarity at least to the fundamentals of the situation. |
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| In 2012 the Prince of Peace Village development had a loan worth $70 million from the investment fund. (CBC) |
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| Let's see. The fund gave roughly 70% of its cash to this white elephant, but this ministry did not even pay interest on the loan. When did the auditors begin to smell the pot roast? |