Shrinking Membership, Swelling Debts Force Church Into Bankruptcy

LYNWOOD — Faced with decreasing membership and growing debts, a small church in Lynwood has taken the unusual step of filing for reorganization under federal bankruptcy laws to stave off its creditors.

The Rev. C.C. Coleman, pastor of New Life Baptist Church of Lynwood, estimated the church’s debts at $500,000.

Coleman called the decision to file for reorganization under Chapter 11 of the federal Bankruptcy Act “a business move for Christ.”

While many churches in New Life’s position might be tempted to close, Coleman said he is determined to save his church and its adjoining school.

“This is not a give-up situation,” said Coleman, who has been pastor of New Life since 1977.

“Businesses do it (file bankruptcy proceedings) all the time. Why not the church?” said Coleman, who also is president of the Lynwood Ministerial Assn., a member of the City Council’s committee on gangs and a former City Council candidate.

After last Sunday’s regular church service, Coleman held a closed-door session to inform the congregation of his action.

About 50 church members attended. Those interviewed afterward said they support the pastor’s move and will stand by him.

“I think this is a good move,” said Wayne Marsh. Marsh, who is in the Navy and stationed in Long Beach, said he has attended the church for more than a year.

“He (Coleman) is the leader, and we are the followers,” said Celesten Nelson, who lives in Compton. “The membership is small, but we will do what we can to save the church.”

Another member, Jewel Kay of Compton, said the congregation would do whatever was necessary to save the church, including raising funds.

The Rev. Donald Kennedy, controller for the American Baptist Churches of the Pacific Southwest, of which New Life is a member, called the move to file for reorganization “very rare for a church.”

“Most churches simply scale back until they can pay the bills. Occasionally, they just simply close their doors,” said Kennedy, whose organization acts as an adviser to more than 300 member churches throughout the Pacific Southwest.

Kennedy said he was not aware of New Life’s situation. “They have not sought our help,” he said.

A few churches in Lynwood, a predominantly Latino and black community of about 55,000, apparently are experiencing some difficulties with drops in membership, said the Rev. John Hopkins, pastor of True Vine Missionary Baptist Church. He said it is difficult to determine why membership is dwindling at some churches and increasing at others.

As for New Life, Hopkins said: “It is a sad situation. The church is one of the few, if not the only, black church in the community with a school.”

Coleman said the difficulties for New Life, a predominantly black church in a low-income neighborhood that has changed to predominantly Latino, started when the membership began to decline and the school experienced some financial difficulty.

He said that in the last five years the church has lost about 175 members, and that it experienced a large drop in membership when General Motors closed its plant in nearby South Gate in 1983. Because of the plant closure, Coleman said, four or five families who had regularly contributed to the church left to find jobs elsewhere.

The minister said he has been unsuccessful in his effort to recruit members because of “an undercurrent of apathy in Lynwood. I’ve gone door-to-door (in the neighborhood around the church). People just will not attend church,” Coleman said.

Coleman said 50% of his members come from surrounding communities, including Paramount, Long Beach and Inglewood. “I can count my Lynwood membership on my hand,” he said.

Coleman would not give specific membership figures, saying only that the church serves about 50 families. However, according to records of the American Baptist association, the church’s membership is about 200.

New Life, which has remained a Baptist church throughout its history, was built in 1929, Coleman said.

Coleman declined to be specific about the church’s financial problems, but he said that as long ago as 1979, when the church and school had a combined operating budget of more than $200,000, the school had $7,000 in debts.

School Fluctuates

He said the debts were caused by parents and guardians of students who did not pay their bills. The school, the New Life Christian School, charges a $45 registration fee and up to $125 in monthly tuition. Coleman said the school enrollment fluctuates between 50 and 100 students. The school runs a regular kindergarten-through-eighth-grade curriculum from September through June and will offer a summer session this month, Coleman said.

In April, there was an apparent move to sell the property because of a failure to pay the mortgage. The Lynwood Press, a local newspaper, ran a legal advertisement March 24 about the public sale by All Counties Mortgage Service Co. of Burbank. The sale was scheduled for April 14.

The debt was listed in the legal ad as $65,308.32. Susan Nelson, a vice president of All Counties Mortgage, said the company would have no comment on the matter.

Asked about the mortgage, Coleman said: “It has been taken care of. It is personal business. I do not care to discuss it.”

Coleman filed a Chapter 11 bankruptcy petition on the church’s behalf in the Central District bankruptcy court June 17. In Chapter 11 cases, the debtor normally remains in possession unless the court appoints a trustee.

The petition, which includes little detail, lists the church’s total assets at $1,280,000. It lists secured debts, which would include mortgages, at $520,000. Other liabilities, apparently including insurance, merchandise, office equipment and supplies that have not been paid for, amount to $21,814.84.

A meeting of the church’s creditors is scheduled for 10:15 a.m. July 26 in the Office of the U.S. Trustee at the federal building in downtown Los Angeles, according to Lawrence Kraines, assistant U.S. trustee. The office, which oversees or monitors bankruptcy proceedings, is part of the Department of Justice.

The meeting will allows creditors to question the debtor, and the debtor is given time to reorganize and prepare a plan of payment, Kraines said.

Attorney Kyle Lapesarde, who is representing Coleman and the church, said through a spokeswoman that there would be no comment on the case. The spokeswoman, an administrative assistant for Lapesarde, said the attorney described the petition as “just a standard bankruptcy.”