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A summary of the ABC District CEF situation

January 16, 2015 No Comment

NOTE: The following is a summary of information on the current financial situation taking place in the ABC District, and is derived from news reports, official statements, and other communications. It is supplemented with new comments from LCC President Robert Bugbee.

On January 5, the Alberta-British Columbia (ABC) District announced that, as a result of its Church Extension Fund (CEF) activities, it faces a serious financial situation which could potentially lead to the District’s closure. In a letter to investors that day, District President Donald Schiemann advised that the CEF was “facing a cash flow shortage” and that it had put a moratorium on all withdrawals and deposits.

“The foundation of our options is clear,” President Schiemann explains in the letter. “We will need to begin selling District assets to pay back our investors.” To that end, the District has articulated two potential ways forward. The first is liquidation, and would result in the total divestiture of ABC District assets as soon as possible in an effort to recoup CEF losses. Under this option, all District assets would be sold and the ABC District would cease to operate.

The second option the ABC District has suggested includes restructuring the CEF. In this option, the District would sell many of the District’s assets to recoup losses while retaining the Prince of Peace Manor and Harbour in Calgary, with the intention of generating additional payments for CEF investors. “The objective would be to continue to pay the income from the Manor and Harbour to you,” the ABC District letter to investors explains, “until it made sense to sell the Manor and Harbour.” The District suggests that this could potentially result in higher payouts to CEF investors but notes it represents “a higher risk.” The District would continue to operate under this proposal.

The ABC District is separately incorporated and operates its activities, including its Church Extension Fund, independently of Lutheran Church–Canada (LCC). LCC has no management of the CEF or any other District programs.

“In the end, it is investors in the ABC District CEF who will need to decide what steps to take next,” noted Rev. Dr. Robert Bugbee, President of Lutheran Church–Canada. He encouraged investors to seek out sound financial advice as they make decisions for the future, noting they should not feel pressured to act in any way contrary to their consciences.

“The whole situation is heartbreaking,” President Bugbee said. “Many of our faithful people are now facing significant losses. They are understandably worried, confused, and angry. May God give them the strength they need in this difficult time. I ask LCC members across the country to keep them and the entire situation in prayer constantly.

“At the same time, this is an opportunity for our church family to show the love of Christ in practical ways too,” he continued. “I am heartened by messages from local churches in Alberta and British Columbia, where congregational leaders are already looking for concrete ways in which they can help their fellow parishioners who are now in trouble. We all need to provide as much personal and emotional support to those affected by this situation as possible.

“LCC itself has no legal authority to step in and manage the ongoing financial situation in the ABC District, as some have wished,” President Bugbee explained. “Because the District is a separate corporate entity, we are legally not allowed to intervene.”

But President Bugbee was also clear that LCC is monitoring the situation closely. “At this moment, we are awaiting the decisions of CEF investors so that we can know more clearly what steps LCC should take and when to take them.”

The ABC District is holding a series of meetings January 15-16 to allow investors to discuss the options the ABC District has suggested as ways forward. The District has noted on its website that “provision is being made available on a short-term basis” for those experiencing “immediate hardship as a result of this situation.”

The ABC District has also encouraged people with questions about the CEF situation to contact them at 1-888-295-0638 or info@lccabc.ca.

Last week, in an initial response to the emerging situation in the ABC District, Lutheran Church–Canada published a statement expressing its deep concern and offering prayer for all those involved. This past Wednesday it published an additional statement providing answers to a series of frequently asked questions it has heard over the past week.

One recurring question has been what will happen to LCC congregations in Alberta and British Columbia should the ABC District be unable to continue in its current form. “Let me be clear,” President Bugbee said. “LCC will continue to provide spiritual support and supervision to our congregations in Alberta and British Columbia regardless of what does or does not happen to the ABC District as a corporate and administrative entity. Our church family should work to remain just that—a family.”

Additional information on the current situation in the ABC District has been reported online by CBC News in news stories published January 15 and January 16. 660 News in Calgary also published a story January 16 on the situation.