Facing bankruptcy perhaps as early as next year and with no commitment from Ottawa to prevent that, General Synod has begun to explore the option of seeking court-ordered protection from creditors.
The route of seeking protection under the Companies Creditors Arrangements Act was raised in a closed session – later made public – at the May meeting of Council of General Synod here. The church also announced results of a recently completed internal study that concludes if legal bills continue at their present pace, General Synod could run out of cash as early as 2001.
Compounding the problem are financial woes in the Diocese of Niagara that will cut the expected contribution from the Hamilton-based diocese by $429,000 this year.
The national church had budgeted for a surplus this year. The effect of Niagara’s decision means $224,000 has to be cut from the budget, treasurer Jim Cullen said. With half the year gone, programs will certainly be cut; no decision on staffing has yet been made.
The prediction regarding the onset of bankruptcy set the tone for the four-day meeting. It resulted in directions from council that a crisis plan be prepared and that senior staff find ways to end the year with a balanced budget, excluding residential schools expenses.
Departments at General Synod will be asked how they could make cuts of 10, 20 and 30 per cent next year. Council ordered a special task force be struck to make budget proposals for 2001. A separate group will investigate alternate structures of organization.
A fund may be set up to allow people to contribute money towards compensating Natives.
The church hopes to know within months whether it can reach an agreement with Ottawa to cap the amounts it has to pay in settlements and other costs, General Secretary Jim Boyles said.
If no agreement is reached, bankruptcy becomes an option. The national church can be petitioned into bankruptcy by a creditor or could choose to do so itself. Or it could seek protection under the Companies Creditors Arrangements Act, that would give it time to restructure.
Being granted protection from creditors would result in a freeze of all court actions against the church while it sets aside all the money it can for its liabilities. Creditors and claimants would be told to submit claims and that pot of money – likely several million dollars – would be offered as a final settlement.
Any creditor refusing to accept that option could petition the church into bankruptcy.
An obvious question is why indigenous people suing the church would choose to settle for a fraction of what they are claiming. Mr. Cullen said once a company claims bankruptcy, its assets are sold in a kind of “fire sale” that brings in only a fraction of their worth.
Since Ottawa is jointly liable for the claims, once the church has paid all it can, claimants could go to the government for the rest.
The financial news council heard during its meeting from May 4 through May 7 was mostly bad. While hoping to balance its budget in 1999, the church actually ended the year with a $2-million deficit.
Mr. Cullen said $1.5-million of that was due to an overrun on residential schools expenses.
The other half-million was due to a drop of $120,000 in diocesan giving, lower investment income, higher bank interest, reduced annuities and assorted other costs.
Several COGS members expressed frustration that the best they could do at the meeting was “tinker” with things or give advice to other bodies who would then tackle the work of budget cutting and potential restructuring.
Members were asked to give advice by defining such things as values and core competencies and ranking items like healing and reconciliation and ecumenical relations.
In other COGS highlights:
- Incorporation of the Primate’s World Relief and Development Fund was given the go-ahead. It will ensure donations made to the fund are used for those purposes only.
- Rev. John Fogleman from the Evangelical Lutheran Church in Canada said his church remains absolutely committed to full communion with the Anglicans. Lutherans want to hear concrete ways in which "we can enter into solidarity with you."
- A task group will prepare a human rights paper for General Synod in 2001.
- Ecumenical coalitions have been warned the church may have no money to contribute next year.