2 More Groups Led by the Rev. McBirnie File for Bankruptcy

Two more organizations headed by a financially and legally troubled Glendale minister filed for bankruptcy last week, making a total of three groups he headed to do so in the past two months.

The California Graduate School of Theology, a nondenominational seminary in Glendale opened by the Rev. William Steuart McBirnie in 1969, filed a bankruptcy petition with the U.S. Bankruptcy Court in Los Angeles. The so-called Chapter 11 petition calls for reorganizing the theology school rather than liquidating the school’s assets to satisfy creditors.

The Concord Senior Housing Foundation, which owns the Concord senior citizen housing complex in Pasadena, last week filed a Chapter 11 bankruptcy petition in Washington. The foundation was formed in 1979 when it purchased the Concord, a federally subsidized apartment building operating under the rent-subsidy program of the federal Department of Housing and Urban Development.

Last week’s bankruptcy actions follow the filing in June of a similar bankruptcy petition by Community Churches of America, the umbrella organization for McBirnie’s religious enterprises. Community Churches of America also is petitioning for a Chapter 11 reorganization with the federal court in Washington, where the former Glendale-based organization is headquartered.

The bankruptcy filings are the latest in a series of complicated financial and legal maneuvers of a once-flourishing religious empire that has been ordered by civil court judges in Glendale and Los Angeles to pay back money borrowed from former followers of the charismatic minister. McBirnie faces several other pending lawsuits brought by disgruntled members of his flock, many of them elderly Glendale residents who claim to have invested their life savings in McBirnie’s enterprises.

In its bankruptcy petition, the theology school claims to have assets of $1.7 million and liabilities of $4.6 million. A listing of the school’s 20 largest creditors includes two other McBirnie-headed organizations, former parishioners who have sued McBirnie to collect outstanding loans, former employees and a Baptist church in Indianapolis. The school owes money to more than 300 creditors, most of them individuals or couples, the petition says.

According to its bankruptcy petition, Concord Senior Housing Foundation has $5,279,000 in debt and $5 million in assets, primarily the 14-story, 150-unit apartment building at 275 Cordova St. in Pasadena. It also lists more than 300 creditors, many of them the same parties cited in the bankruptcy petitions filed by Community Churches of America and California Graduate School of Theology.

Philip McNutt, a Maryland attorney representing both Community Churches of America and Concord Senior Housing Foundation, said he will ask the court to consolidate the bankruptcy proceedings of the two organizations. McNutt said the housing foundation plans to dissolve as a nonprofit corporation and give Community Churches of America control of the Pasadena apartment building.

The housing foundation ran into legal difficulties in 1982 when it paid off the 34-year debt remaining on HUD’s 50-year mortgage, put the building up for sale and notified tenants that their rent would be raised. The tenants won a class-action suit that made national headlines, and the Concord came back under the authority of HUD’s subsidy program. The building is still owned by Concord Senior Housing Foundation.

The bankruptcy filings will make it harder to collect the court-ordered judgments awarded to former parishioners because payment must now be arranged through the bankruptcy court, said Christ Troupis, an attorney who won a $1.2-million decision in May on behalf of 24 former parishioners of McBirnie’s United Community Church.

Troupis says the theology school doesn’t need to go through the bankruptcy procedure to satisfy its debt.

“They have property,” Troupis said, referring to several pieces of property in downtown Glendale owned by the school. “I don’t think they have enough cash lying around. If they sold their property, they could pay their debts.”

John H. Craig, the attorney representing California Graduate School of Theology in its bankruptcy action, declined to comment on the matter but said a statement would be issued soon. Telephone inquiries made to the school were referred to Craig.

Troupis said the next step in the school’s bankruptcy will be an informal meeting of the theology school’s 20 largest creditors before a U.S. trustee in federal bankruptcy court in downtown Los Angeles. The meeting has to take place within 10 days of the Aug. 14 filing date of the bankruptcy petition, Troupis said. He will ask that a disinterested third party be appointed as trustee to oversee dissolution of the school’s debts.

Troupis also said he will request that the bankruptcy actions taken by Community Churches of America and Concord Senior Housing Foundation be transferred to the federal court in Los Angeles.

A Glendale judge in May ordered eight organizations headed by the 65-year-old minister, including the three that have filed bankruptcy, to pay a total of $1 million in punitive damages to former parishioners in addition to paying $200,000 in unpaid loans and accrued interest. That decision is being appealed.

Community Churches of America, the theology school and the housing foundation also were ordered by a Los Angeles Superior Court judge in July to reimburse a Culver City couple $128,000 in unpaid loans and accrued interest.

Other McBirnie-headed organizations involved in lawsuits stemming from the unpaid loans are Voice of Americanism, United Community Churches of America, Heritage Foundation, United Community Church and World Emergency Relief Foundation.

The unpaid loans supposedly were used to buy property and make improvements on the complex of buildings in downtown Glendale where McBirnie runs his enterprises. Most of the loans, which were to bear 8% to 10% interest annually, were for $1,000 to $25,000 and were solicited roughly between 1972 and 1980.