The bankrupt Richmond Christian Center including disputed land in the foreground. (Photo by Burl Rolett.)
The recent sale of a disputed set of properties near Manchester is the latest twist in the tale of a Southside house of worship.
On May 5, the son of Richmond Christian Center Pastor Stephen Parson Sr. sold land previously owned by the church in an apparently lucrative real estate flip. The parcels may have held the key to delivering the church from its financial troubles as its main lender considered them crucial to recovering a defaulted $4.4 million loan.
The dirt in question is a 2.6-acre, 17-parcel tract stretching northwest from the corner of Cowardin Avenue and Perry Street, and sits just north of Richmond Christian Center’s 77,000-square-foot megachurch.
Stephen Parson Jr., through an LLC, sold the land this month for $850,000. The entity bought the entire portfolio from the church for $180,000 in 2011. At the time, the tract was assessed at more than $1 million. The Christian Center claims in federal court records that 2011 sale was a mistake and that it only intended to sell one of the 17 parcels to Parson Jr.
Foundation Capital Resources, a Mississippi-based lender and REIT, is still owed about $2 million by the church and wanted the parcels returned to the Christian Center before Parson Jr. could sell them. The lender has twice attempted to foreclose on the church only to be blocked both times by the Christian Center’s Chapter 11 bankruptcy filings.
The lender argued recently in federal court that the church needed to get the real estate back so it could turn around and sell the land to raise money for its bankruptcy estate.
But the May 5 deal saw Parson Jr.’s LLC sell the land to 3620 Cowardin LLC, which is tied to Mini Price Storage, a Virginia-based storage unit company with another location on Broad Street.
Lawyers on both sides of Richmond Christian Center’s bankruptcy proceedings said Friday they were unaware of the sale and are now unsure what course the case may take.
Kevin Funk, a Durrette Crump attorney who represents the Christian Center, said the church could seek a judgment against SP Five Properties, the entity tied to Parson Jr. that sold the land this month. Without more knowledge of the deal, however, Funk could not say whether the church would likely be able reclaim the land in the aftermath of the sale.
Paul Campsen, a Kaufman & Canoles attorney representing Foundation Capital, said he was crafting a lawsuit the REIT planned to file against Parson Jr.’s LLC. He added Foundation Capital will still seek to reclaim the property despite the sale.
In court filings last month, Foundation Capital expressed concern that if the property sold, the buyer might be considered a “bona fide purchaser.” Under U.S. bankruptcy law, a bankruptcy trustee may not recover property transferred to a third party if the buyer acted in good faith and without knowledge of the property’s entanglement in bankruptcy proceedings.
Roy Terry, a Sands Anderson bankruptcy lawyer not involved in the case, said the bankruptcy estate would be unable to reclaim the land from a bona fide, third-party buyer. He added that bankruptcy trustees will often file a written notice called a “lis pendens” on real estate to alert potential buyers of pending legal action.
A representative for the Christian Center bankruptcy estate could still try to file such a notice, Terry said, but it might not do any good after the transfer. Moving forward, the church or the lender could also seek an injunction to freeze the $850,000 Parson Jr. gained in the sale.
“If the land was basically free and clear and got transferred in exchange for $850,000 cash, the bankruptcy estate would have a claim for that money,” Terry said.
Since first retreating into bankruptcy last fall, the Christian Center has tried to sell off its main church building and a separate portfolio of Southside properties in a conventional sale. Pastor Stephen Parson Sr. said earlier in April that the church planned to use the proceeds to pay Foundation Capital and build a new church elsewhere.
Parson Sr. did not return a Friday phone message.
Court records show the Christian Center has enlisted a Midlothian-based real estate brokerage to sell its holdings at a $5 million listing price. Foundation Capital said the only offer the church has received so far was for $1.8 million, about $200,000 shy of the amount the Christian Center owes its lender.
The Mini Price Storage land, Foundation Capital argued, will need to make up the difference. Last month, Foundation Capital asked a court to appoint a Chapter 11 trustee to step into the Christian Center’s bankruptcy case, a move that could have pushed the church closer to full-fledged asset liquidation.
To stave off the trustee appointment, the church agreed to assist Foundation Capital in suing Parson Jr. for the land. Foundation Capital planned to essentially bring the suit against Parson Jr. on behalf of the Christian Center. The church itself had not brought a claim against Parson Jr. because Parson Sr. did not want to sue his son. In an interview earlier this month, Parson Sr. said his son is not involved in the operations of the Christian Center.
At an April 23 hearing, Foundation pushed back its trusteeship request for 60 days, a move Funk said was brought about in part by the church’s agreement to help the lender pursue the SP Five Properties land.
The bankrupt Richmond Christian Center including disputed land in the foreground. (Photo by Burl Rolett.)
The recent sale of a disputed set of properties near Manchester is the latest twist in the tale of a Southside house of worship.
On May 5, the son of Richmond Christian Center Pastor Stephen Parson Sr. sold land previously owned by the church in an apparently lucrative real estate flip. The parcels may have held the key to delivering the church from its financial troubles as its main lender considered them crucial to recovering a defaulted $4.4 million loan.
The dirt in question is a 2.6-acre, 17-parcel tract stretching northwest from the corner of Cowardin Avenue and Perry Street, and sits just north of Richmond Christian Center’s 77,000-square-foot megachurch.
Stephen Parson Jr., through an LLC, sold the land this month for $850,000. The entity bought the entire portfolio from the church for $180,000 in 2011. At the time, the tract was assessed at more than $1 million. The Christian Center claims in federal court records that 2011 sale was a mistake and that it only intended to sell one of the 17 parcels to Parson Jr.
Foundation Capital Resources, a Mississippi-based lender and REIT, is still owed about $2 million by the church and wanted the parcels returned to the Christian Center before Parson Jr. could sell them. The lender has twice attempted to foreclose on the church only to be blocked both times by the Christian Center’s Chapter 11 bankruptcy filings.
The lender argued recently in federal court that the church needed to get the real estate back so it could turn around and sell the land to raise money for its bankruptcy estate.
But the May 5 deal saw Parson Jr.’s LLC sell the land to 3620 Cowardin LLC, which is tied to Mini Price Storage, a Virginia-based storage unit company with another location on Broad Street.
Lawyers on both sides of Richmond Christian Center’s bankruptcy proceedings said Friday they were unaware of the sale and are now unsure what course the case may take.
Kevin Funk, a Durrette Crump attorney who represents the Christian Center, said the church could seek a judgment against SP Five Properties, the entity tied to Parson Jr. that sold the land this month. Without more knowledge of the deal, however, Funk could not say whether the church would likely be able reclaim the land in the aftermath of the sale.
Paul Campsen, a Kaufman & Canoles attorney representing Foundation Capital, said he was crafting a lawsuit the REIT planned to file against Parson Jr.’s LLC. He added Foundation Capital will still seek to reclaim the property despite the sale.
In court filings last month, Foundation Capital expressed concern that if the property sold, the buyer might be considered a “bona fide purchaser.” Under U.S. bankruptcy law, a bankruptcy trustee may not recover property transferred to a third party if the buyer acted in good faith and without knowledge of the property’s entanglement in bankruptcy proceedings.
Roy Terry, a Sands Anderson bankruptcy lawyer not involved in the case, said the bankruptcy estate would be unable to reclaim the land from a bona fide, third-party buyer. He added that bankruptcy trustees will often file a written notice called a “lis pendens” on real estate to alert potential buyers of pending legal action.
A representative for the Christian Center bankruptcy estate could still try to file such a notice, Terry said, but it might not do any good after the transfer. Moving forward, the church or the lender could also seek an injunction to freeze the $850,000 Parson Jr. gained in the sale.
“If the land was basically free and clear and got transferred in exchange for $850,000 cash, the bankruptcy estate would have a claim for that money,” Terry said.
Since first retreating into bankruptcy last fall, the Christian Center has tried to sell off its main church building and a separate portfolio of Southside properties in a conventional sale. Pastor Stephen Parson Sr. said earlier in April that the church planned to use the proceeds to pay Foundation Capital and build a new church elsewhere.
Parson Sr. did not return a Friday phone message.
Court records show the Christian Center has enlisted a Midlothian-based real estate brokerage to sell its holdings at a $5 million listing price. Foundation Capital said the only offer the church has received so far was for $1.8 million, about $200,000 shy of the amount the Christian Center owes its lender.
The Mini Price Storage land, Foundation Capital argued, will need to make up the difference. Last month, Foundation Capital asked a court to appoint a Chapter 11 trustee to step into the Christian Center’s bankruptcy case, a move that could have pushed the church closer to full-fledged asset liquidation.
To stave off the trustee appointment, the church agreed to assist Foundation Capital in suing Parson Jr. for the land. Foundation Capital planned to essentially bring the suit against Parson Jr. on behalf of the Christian Center. The church itself had not brought a claim against Parson Jr. because Parson Sr. did not want to sue his son. In an interview earlier this month, Parson Sr. said his son is not involved in the operations of the Christian Center.
At an April 23 hearing, Foundation pushed back its trusteeship request for 60 days, a move Funk said was brought about in part by the church’s agreement to help the lender pursue the SP Five Properties land.