Crystal Cathedral Bankruptcy: Catholic Diocese Increases Bid in Attempt to Buy Megachurch's Property

The Roman Catholic Diocese of Orange has increased its offer to $55.4 million for Crystal Cathedral Ministries' property, in an ongoing squabble over who gets to purchase the indebted megachurch's 40-acre Garden Grove, Calif., real estate.

The diocese has increased its bid by $1.8 million, The Orange County Register reported, based on a Wednesday court hearing.

The megachurch, which claims more than 10,000 members and broadcasts the popular televised service, "The Hour of Power," owes an estimated $50 million to creditors, which forced the founding pastor, the Rev. Robert H. Schuller, and his family to put the property on sale after filing for Chapter 11 bankruptcy protection in October 2010.

Originally, the list of potential buyers was narrowed down to three main bidders: the diocese, Hobby Lobby and Chapman University, an Orange County-based private university affiliated with a Protestant organization called Disciples of Christ. The university, which offered $50 million for the campus, will allow Crystal Cathedral to "continue serving its mission," by letting it lease, and eventually buy back its core buildings.

On Oct. 26, the Schullers announced that they have “reluctantly” agreed to sell the property to the university. The diocese was the highest bidder at the time, offering $53.6 million, with Hobby Lobby offering a $47.5 million bid.

On Oct. 31, it emerged that the Roman Catholic Diocese of Orange had filed a petition in a California courthouse to stop the sale of the campus to Chapman University. The diocese reportedly claimed in the lawsuit that under the plan proposed by the school, the ministry could be in the red once again by May 2012. The plan Chapman University offered in its bid for the Garden Grove church property would allow church administrators to buy back the campus and the cathedral for $23.5 million within five years. According to the Crystal Cathedral, Chapman University's offer also allows it to continue using the cathedral, the school and other church buildings.

The diocese promised during the Wednesday hearing to honor the legacy of Schuller, the ministry's founder, and to maintain a space for inter-faith worship and preserve the integrity of the Memorial Gardens, The Register reported.

Judge Robert Kwan is expected to approve one of the two proposals (the diocese's or Chapman University's) next week, according to the daily.

The Crystal Cathedral filed for Chapter 11 bankruptcy protection after reportedly experiencing financial difficulties since 2002, in what is a controversial and much publicized case of a megachurch possibly going out of business.

On Sept. 30, creditors in the megachurch's bankruptcy case filed a lawsuit against church administrators, including the Schullers, in which they are accused of borrowing money from Crystal Cathedral's endowment funds, therefore receiving good salaries even as the church was experiencing financial malaise. The suit claims that the Rev. Schuller and his relatives borrowed as much as $10 million from the endowment funds between 2002 and 2009.

On Oct. 4, Schuller denied the allegations, calling them "serious and untrue."

Some Christian leaders have been suggesting that the cloudiness surrounding the bankruptcy process is giving Christianity a bad image.