PHOENIX (BP)The much-anticipated restructuring plan for the troubled Baptist Foundation of Arizona includes filing for a Chapter 11 bankrupcty reorganization. Under the plan, more than 13,000 investors can choose options of 20 cents on the dollar of their investments or shares in a soon-to-be created for-profit company.
The embattled BFA, an agency of the Arizona Southern Baptist Convention, with more than $500 in investment products, is under an Aug. 10 "cease and desist" order by the Arizona Corporation Commission (see "Baptist Foundation Faces Investment Fraud Charges," Christianity Today, Oct. 25, 1999, p. 18). The commission ordered BFA to discontinue immediately the offering and selling of its investment products. According to the order, the foundation or its affiliates sold securities from Arizona through misrepresentations and omissions of fact and engaged in business practices in violation of state law.
In a news conference in Phoenix Nov. 5, the BFA and its Ad Hoc Noteholders Committee, representing BFA investors, revealed the terms of the BFA's restructuring plan. Officials said the BFA would file for protection under Chapter 11 of the U.S. Bankruptcy Code. That would protect the company from creditor suits while developing a reorganization plan which must be acceptable to the creditors and the bankruptcy court.
"Due to the economic circumstances of some of the investors, the [restructuring agreement] permits each investor to choose one of two alternatives," said Jock Patton, Phoenix attorney and chairman of the committee formed to oversee the restructuring process. "Under the first alternative, known as the 'Cash Out Option,' each investor will receive cash amounting to approximately 20 percent of the principal ...1