A federal bankruptcy judge in Boston this week told OneUnited Bank that it must wait for $2.9 million raised in a real estate auction by its borrower, the Charles Street African Methodist Episcopal Church, until the two sides have resolved their remaining legal disputes.
Judge Frank J. Bailey on Wednesday denied OneUnited’s motion to take possession of the funds right away. Instead, the money must remain in escrow for now.
The Charles Street AME church owes nearly $5 million to OneUnited. It fell behind on a $3.4 million construction loan in 2008 and 2009 while building its Roxbury community center and owed another $1.3 million on a loan secured by the church building itself.
The bank, suffering its own losses in the financial crisis, sought full repayment of the construction loan after a number of extensions. The two sides became locked in a stalemate and the bank, which says its mission is to support minority communities in Los Angeles, Boston, and Miami, tried to foreclose on the smaller of the two loans and force a sale of the historic black congregation’s church.
The church filed for bankruptcy protection in March 2012, and the legal fight has dragged on ever since. In April, the church finally gave up hope of completing the Roxbury Renaissance Center and proceeded to auction it off, along with a parking lot and some adjacent empty storefronts.
In June, the nonprofit Action for Boston Community Development Inc. won the bidding, at $2.9 million. The bank filed an emergency motion to get the money immediately, which was rejected by the judge.
None of the bank’s representatives or lawyers returned messages seeking comment. The bank is owned by president Teri Williams, who runs its day-to-day operations and has appeared in court many times over the course of the litigation, and by her husband, chief executive Kevin Cohee.
The bank also wanted the church’s counterclaims against it to be heard in state court, rather than the bankruptcy court. But Bailey denied that as request as well, according to a court filing.Beth Healy can be reached at email@example.com. Follow her on Twitter @HealyBeth.