Charles Street AME Church to file for bankruptcy to block OneUnited's foreclosure action

By Beth Healy, Globe Staff

With their lender unwilling to negotiate or halt foreclosure proceedings, members of the Charles Street African Methodist Episcopal Church voted Tuesday night to file for federal bankruptcy protection, heading off OneUnited Banks plan to auction the historic congregations property this week.

At a special meeting held at the Roxbury church Tuesday evening, lawyers for Charles Street AME laid out options for avoiding foreclosure on a $1.1 million loan. The estimated 250 members members in attendance voted to proceed with a Chapter 11 reorganization filing, to forestall the threatened sale of the church on Thursday, the churchs lawyer, Ross Martin, said.

The action comes after a pitched battle between two prominent black institutions over roughly $4 million in loans. OneUnited, among the nations largest black-owned banks, ignored pleas from lawmakers, ministers, and business leaders to talk, and ultimately left the church with little room to maneuver.

Their decision to immediately move to foreclosure, and the senseless way that they did it, from the churchs viewpoint, is inconceivable, Reverend Gregory G. Groover Sr. said in an interview with the Globe. The bankruptcy filing, he said, allows the church to go on and continue to operate and focus on our ministry.

Under the bankruptcy petition, which lawyers planned to file electronically Tuesday night, Charles Street is offering to repay the money it owes OneUnited -- totaling about $4.2 million -- over 30 years. That includes both the $1.1 million loan secured by the church property and $3 million the church borrowed to build a community center a block away.

The bank could not immediately be reached for comment. In recent weeks, its officials have insisted that it gave Charles Street plenty of time to repay its loans, and declined to discuss its high-profile customer.

Under the bankruptcy petition, the church is looking to keep all its property, including a house in Milton that has served as a pastors residence (its not currently in use) and retail space near the church. Its looking to extend the payments for the loans over 30 years, more like a home mortgage than a commercial loan, at a rate of 5.25 percent.

The umbrella organization that includes Charles Street, the First Episcopal District of Philadelphia, would raise $1.5 million to help repay the debt.

In 2007, OneUnited chief executive Kevin Cohee touted his partnership with Charles Street as a show of commitment to the community and a catalyst for opening his new Grove Hall bank branch that year. He agreed to lend the church $3.7 million to build the Roxbury Renaissance Center, even though the church couldnt afford the $800,000 down payment, according to legal filings. When the church needed an extension on the loan in 2008, he granted it.

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Charles Street AME Church to file for bankruptcy to block OneUnited's foreclosure action