The Diocese of Bathurst here in Australia is in a financial mess. It’s not easy for any group of churches in numerical decline but it’s pretty common knowledge now that there is a real problem with the (now frozen) bank balances.
The background is well worth recounting, although there is no pleasure to be taken in it (and if there are inaccuracies here I would be pleased to be corrected).
The diocese took out a line of credit with the Commonwealth Bank of Australia for a figure reported to be up to A$38m. The loan was arranged between the then bishop, Richard Hurford, and a bank manager. While the loan is not secured on any specific assets, Hurford wrote to the bank on diocesan letterhead in his role as bishop and under seal to essentially guarantee the loan on behalf of the diocese.
The bank is now in the process of calling in the loan after the diocese was unable to make an interim payment and has begun legal proceedings to recover the debt, its argument resting at least in part upon Hurford’s letter.
At court in April the bank claimed the outstanding debt was approx. $25m which represents a massive millstone around the diocese’s neck. There are only 33 parishes which now share the burden to the sum of approx. $750,000 each. Selling of parish property has been contemplated but up till now rejected. Besides, I understand the market for old rundown church buildings in the west of New South Wales is not exactly liquid.
There have been some attempts to raise funds, 2 schools being sold to the Sydney Anglican Schools Corporation, but the debts still remain practically insurmountable.
But at the diocese won’t go down with a fight.
Earlier this week the current diocesan, Bishop Ian Palmer, wrote the following letter to his clergy and other interested parties (including other bishops in Australia)
This must be very frustrating for the bank. It’s claim is over the assets of the Diocesan Property Trust but the court has given the diocese permission to sell assets in order to fight them in court over their right to the rest of the Trust assets. Either way the Property Trust is highly likely to be empty at the end of the matter, but this way the bank may get less money.
As far as this is a winning solution for the diocese, one well-placed senior source said to me “Bishop Palmer has landed on Mayfair with a hotel on it and he’s desperately trying to mortgage Old Kent Road to see if he can pay the bill”. Don’t get me wrong here, you do have to have a large amount of sympathy for Palmer – landing on Mayfair is bad enough, but it’s much worse if somebody else rolled the dice to get you there.
All of this raises the important question of what can be done to help the diocese. Obviously there’s plenty of talk including at the Standing Committee of the General Synod. Sources tell me that they have concluded that there is no possible rescue that is viable.
Which means the diocese’s lawyers will have their day in court with the bank. And it’s hard to see them winning. What happens after that will be fascinating.