A Southern Nevada church known for helping exploited sex industry workers won an initial court victory Tuesday in its legal struggle with a bank trying to foreclose on its property.
The Church at South Las Vegas filed for Chapter 11 bankruptcy protection Friday after a lender initiated foreclosure proceedings against its meeting house, actually an office building in Henderson.
On Tuesday, U.S. District Judge Philip Pro denied a motion by lender First Bank of St. Louis in a related civil lawsuit that a receiver be appointed to supervise the bank’s finances.
Pro, though, made it clear he denied the motion not on the merits – but because of the church’s bankruptcy filing. Litigation is typically automatically stayed by bankruptcy filings.
An attorney for First Bank told Pro during the hearing that the bank wants to keep its civil foreclosure lawsuit open as it may ask the bankruptcy court to lift the automatic stay of litigation.
In fighting efforts to have a receiver appointed to supervise the church, church attorneys have argued the church is so far underwater on its mortgage that it doesn’t make sense to continue making mortgage payments and that it needs to preserve cash to build a larger church. The church says it has offered to pay the mortgage if the bank will write down the principal amount of the mortgage.
The building is worth just $2.375 million vs. the $7.653 million owed to the bank, church attorneys say.
Attorneys for the bank say the church’s resistance to making mortgage payments is all the more reason it should be allowed to appoint a receiver to supervise the church while it continues its foreclosure.
"Despite defendant being in possession of nearly $1 million in cash, defendant makes clear in its opposition that it has no intention of using any of that money to lessen its outstanding obligation to First Bank, to make any monthly payments to First Bank or otherwise comply with its obligations," bank attorneys argued in a court filing last month.
"Defendant made a calculated, strategic and willful decision to stop making payments and to default on its loan obligations because it wants to (preserve cash for building a bigger church)," the bank attorneys argued.
Church Pastor Benny Perez commented on the situation during a Sunday sermon called "Walking Through The Storm."
"Storms will come to everyone. Storms are unavoidable," he said.
"Our church is going through the most severe storm in our negotiations with our bank. Most churches would shutter in. They would try to ride out the storm. Not our church. We’re still reaching people," he said. "We’re on mission. We’re going to serve Las Vegas and Henderson."
"We’re fighting an uphill battle. $7.7 million. We’re $5.5 million upside down. And we offered the bank above appraised value.
"You know what the bank said? `No way. We’re going to sue you,"’ he said.
The church, in court filings, has said it would continue paying the mortgage if the bank would write the note down to $2.5 million -- a figure that is slightly above market value but that would result in a substantial loss for the bank.
"We just need to hang on, because a church is not a building. A church is people," Perez said during Sunday's sermon.
"We’re not sending a building out with Annie Lobert to help rescue women," he said.
Lobert founded Hookers For Jesus, which works with a Church at South Las Vegas program in the Las Vegas area called Destiny House to free women from the violence and exploitation of the sex industry.
Perez also complained that while his church and its members are out volunteering and doing good in the community, for instance volunteering to help at schools, the bank trying to foreclose on the church is the recipient of federal TARP assistance money. That means Troubled Asset Resolution Program.
"Here’s a church that is doing things that the state can’t pay for. And we have a bank that takes $295 million of TARP money and they can’t help a church that’s helping the community. Your TARP money paid for their bailout," he said.
The church, which says it has more than 4,000 members, has two locations: The office building at 3051 Horizon Ridge Parkway and space it rents from Foothill High School on College Drive in Henderson.