A door worth walking through

They took their places on wooden benches in the court audience, day after day, seemingly determined to follow every moment of the long-running case.

Teri Williams, president of Boston’s OneUnited Bank, sat on one side of the room and listened to testimony in US Bankruptcy Court. Gregory Groover, pastor of Charles Street African Methodist Episcopal Church in Roxbury, sat on the other side and took it all in.

Their constant presence gives you a sense of the high and very personal stakes in a rancorous dispute between the historic black church and the city’s only black-owned bank. The bank is pursing the church for millions in loans it has been unable to repay, driving Charles Street AME to court seeking bankruptcy protection. Nothing resembling a settlement has emerged for three years.

Then something interesting happened earlier this month. A bankruptcy judge named Frank Bailey seemed to open a door for both the church and the bank, but, of course, it’s up to them to walk through it. This is the time to do exactly that.

Bailey presented himself as a sorely needed voice of reason in a lengthy decision that rejected the church’s reorganization plan, but refused the bank’s request to dismiss the bankruptcy case entirely.

By keeping the case in US Bankruptcy Court in Boston, he has probably avoided a hostage-like loan negotiation in another court that would put the church itself at risk.

He also spelled out in some detail what an acceptable bankruptcy plan might look like— a kind of road map to a resolution.

I called OneUnited the other day and asked if anyone there saw Bailey’s decision as an opportunity. After a pleasant conversation, I was none the wiser. The bank has now filed papers indicating it would appeal the Bailey decision. Not a good sign.

I asked Groover the same question Monday. “This ruling provides a window of opportunity,” he said, “if there is a sincere will to come to the table and see if we can work this out.”

Though the Charles Street AME case has spun lots of subplots, the fundamental dispute revolves around Roxbury Renaissance Center, an office and function building constructed on Warren Street near the church and funded with money from OneUnited. That construction loan of about $3.7 million and other borrowing have left the church deep in debt.

The building itself looks much as it did when the first lawsuit was filed in 2010. A handsome, two-story brick structure, it appears finished on the outside but is incomplete and unused inside and is surrounded by a chain-link fence.

Much mud has been slung over this building and the money that paid for most of it. Church supporters never hesitated to condemn greedy bankers, though OneUnited had actually extended Charles Street AME’s loans several times. Once the dispute went public, the bank refused to talk to credible intermediaries and stuck to the threat to foreclose on the church if it didn’t get its money.

That led Charles Street AME to court, where it became clear how just how much the church is struggling financially. Five months ago, Bailey said, it had only $5,400 in unrestricted cash.

The judge turned down the Charles Street reorganization plan for several reasons, including the fact that its aggressive repayment schedule would keep the church and its congregation dangerously close to the financial edge for the next 20 years.

As bankruptcy judges’ calls go, that one wasn’t close. But it’s clear how a better plan could work.

First, OneUnited needs to reduce the amount of debt involved. A substantial cut would still work out better than foreclosure for the bank.

Next, the church has to be prepared to sell some of the three other properties it owns to raise money. In fact, it needs to consider selling the Renaissance Center if a decent offer comes along.

Third, Charles Street AME’s friends with big bank accounts need to come up with the $1.5 million they aim to raise to help the church. That money would fund completion of the Renaissance Center.

Finally, the church’s umbrella organization, the First Episcopal District of Philadelphia, needs to recognize it cannot simply walk away from a crazy Renaissance Center construction loan guarantee it once signed. It should cost something to make that go away.

Like any good compromise, this would make no one involved happy. But it’s time to find a settlement everyone can live with.