Bankruptcy Trustee Questions Debtor Mega-Church Compensation Packages

The trustee in Crystal Cathedral’s Chapter 11 bankruptcy has filed several objections to the six-figure housing allowance provided for the mega-church’s CFO and the salaries given to two of the pastor’s relatives.

The U.S. trustee overseeing the bankruptcy of the mega-church filed objections in court questioning the need for $132,019 as a housing allowance for CFO Fred Southard, whose salary is just $12,000, the Orange County Register said.

“There is no justification whatsoever for a housing allowance of this amount,” the court documents said. “Mr. Southard has failed to explain why such a housing allowance is necessary or appropriate, given this debtor is in Chapter 11 and suffering financial difficulties.”

The trustee also questioned the need for a $70,000 annual salary for Schuller’s youngest daughter Gretchen Schuller Penner, who produces the church’s “Hour of Power” telecast, and the $55,000 salary of her daughter Neyva Penner Klaassen, who books musical guests for the TV show.

Debtors in Chapter 11 bankruptcy or any other type of bankruptcy will not be allowed to spend money in a way that is considered frivolous or unfairly detrimental to creditors.  In the case of a Chapter 11 bankruptcy debtor, they must justify the employee compensation packages especially if such packages seem excessive or simply designed to siphon off assets into the pockets of relatives or friends. If the bankruptcy court finds that the salaries and compensation packages are not justified, the debtor will need to stop payments or reduce payments according to whatever agreement they reach with creditors and the bankruptcy court.