NBA Bankruptcy Proceedings Begin

NBA Bankruptcy Proceedings Begin

“NBA was a vibrant, strong, growing, expanding ministry with magnificent staff and leadership, committed people, and I think everybody felt the sky was the limit … 9/11 and then the huge loss of money and the ensuing bankruptcy were dismal, dismal days.”  –Rev. Dr. Ben Bohren, Former NBA Director of Church Relations; Current Mission Specialist, NBA XPLOR

Ongoing Financial Challenges

As the economy encountered significant challenges in the early 2000s, the NBA moved to shore up operations, reducing and restructuring staff and cutting the budget to realize short-term and long-term savings. Facilities encountered significant shortfalls in funding from county, state, and federal funding sources, and the NBA worked to reduce spending while continuing to fulfill its mission to provide housing and care to older adults, people with disabilities, and at-risk children and youth. “It is hard to identify a time when nonprofit groups have faced financial pressures as severe as those we face today, yet as many of our residents will tell you, their NBA home is the nicest home they’ve ever had,” reported NBA President Cindy Dougherty.

By 2003, “NBA owned and operated 11 senior-care facilities, 3 special-care facilities for individuals who are developmentally disabled, and 4 children’s-care facilities.” The NBA also managed more than 70 HUD-financed, adult low-income residential housing projects. NBA financed its owned facilities with bond debt. “Between 1999 and 2003, NBA’s annual revenues ranged from $123 million to $145 million, but between 2000 and 2003, NBA suffered significant losses.” Source: In Matter of National Benevolent Association of Christian Church (Court of Appeals, 5th Circuit, 2009.)

Summary of Bankruptcy Proceedings

“As a result of unprecedented downturns in investment income, and declines in government reimbursements and charitable giving on the one hand, and the skyrocketing cost of insurance, healthcare, and related services on the other, the financial model on which the NBA and many similar nonprofits are built no longer works.” –NBA Press Release, February 17, 2004

On September 1, 2003, the bank letters of credit supporting NBA bond debt were not renewed. Consequently, “the variable-rate bonds would be subject to a mandatory purchase… An effort to revoke the mandatory purchase was too late, and the first payment became due on December 1, 2003… Donations to NBA slowed, its bond ratings were downgraded, and potential purchasers at its senior living centers demanded refunds of their deposits. Sales halted for several months.” The NBA’s debt restructuring negotiations with its banks were unsuccessful. The NBA filed for bankruptcy on February 16, 2004, and its bankruptcy plan was confirmed on March 2, 2005. “Creditors were paid from the sale of NBA’s real estate, including all 11 senior living centers and its St. Louis headquarters, along with NBA’s cash-on-hand and securities.” Source: In Matter of National Benevolent Association of Christian Church (Court of Appeals, 5th Circuit, 2009.)  

The NBA was compelled by HUD to terminate its management arrangements with each of the 70+ HUD-financed, adult low-income residential housing projects which it had developed and managed. Following emergence from bankruptcy, the NBA transitioned its remaining owned older adult, differently-abled, and children’s units to corporate independence.

Moving Forward

In addition to the support of individual and church donors, the NBA’s primary support for mission and ministry today is through restricted endowment funds, which are now held and invested with the Christian Church FoundationRead on to see how the Disciples Blue Ribbon Panel and NBA’s strategic plan guide our re-visioned ministry to create communities of compassion and care.

“I was concerned, like everybody in the denomination, about the bankruptcy and what it would mean for this health services unit that we had all come to know and love and depend on… There was this question of, ‘Now what do we do?’ –in addition to a very real sense of hope for whatever’s going to happen in the future, and what we are called to do as a board is to be faithful to the task that the denomination has invited us to take on.” –Rev. Belva Brown Jordan, Former NBA Board Chair

Watch video interviews with Rev. Dr. Ben Bohren and Rev. Belva Brown Jordan discussing this time of transition for NBA.