An Indiana church faces bankruptcy after failing to pay off $1.9 million in debt. The twist? Lindberg Road Church of Christ is fighting back, saying its bank encouraged church leaders to finance its upgrades by taking out life insurance policies on elderly members.
In 2006, Lindberg Road "bought $4.35 million in life insurance on 11 of its members"–and claims it was encouraged to do so by Star Financial Bank and Total Financial Group. The goal was to receive death benefits or to resell the policies to Total Financial several years later.
However, Tom Snell, administrator of Anderson Christian School and a former church elder, told the Indianapolis Business Journal that the entire funding strategy "has not worked out the way we were expecting."
Total Financial did not buy the policies when the church tried to sell them in 2009. Now, Lindberg Road Church elders await a bankruptcy court judge's decision on whether or not Star Financial Bank can foreclose upon the church's property.
The church argues that it was "duped" by the bank and wants the judge to alleviate its debt. Attorneys from Star Financial say Lindberg Road Church can afford to pay up on what it owes; the church's property recently appraised at $2.4 million.
CT has regularly reported on bankruptcies of churches and ministries.