Judge Orders Auction of PTL
Judge Orders Auction of PTL
Nov. 17, 1988
COLUMBIA, S.C. (AP) _ A Bankruptcy Court judge on Wednesday threw out pending offers for PTL's assets and ordered an auction Thursday in the federal courtroom, with bidding to begin at $115 million.
''It's really wide open,'' PTL bankruptcy trustee M.C. ''Red'' Benton said after the Wednesday afternoon hearing.
Though Bankruptcy Judge Rufus Reynolds still must approve any buyer, his order signals an approaching end to months of delays in selling the ministry's satellite television ministry, Heritage USA theme park and 1,700 acres of undeveloped property near Fort Mill.
Proceeds will go toward satisfying the ministry's debts, estimated to be as high as $130 million and which include some $55 million claimed by the Internal Revenue Service.
Reynolds said neither a $115 million, financed offer by Toronto businessman Stephen Mernick nor a $113 million, financed, or $70 million cash bid by Vancouver businessman Peter Thomas were acceptable. In part, he said, that's because all contained clauses allowing the buyer to walk away from the purchase within a certain time after closing.
Benton had recommended Mernick as the ministry's buyer.
Neither Mernick nor Thomas would say whether they intended to bid at the public auction set for 9:30 a.m.
Thomas said he planned to attend and would consider his position overnight. Mernick spokesman Alex Coffin said Mernick did not plan to attend.
''He's just carefully considering this,'' Coffin said of Reynold's ruling, ''and will make his decisions known tomorrow.''
Benton said the two men remain the most viable bidders, but that he expects several other groups to try to meet the $1 million Reynolds set as the entrance fee. Thomas and Mernick are not required to put up the money since their financial backing already has been examined.
Bidders have been eyeing the PTL ministry since this spring, when Reynolds ordered that plans to liquidate the ministry begin.
In addition to forbidding a so-called walk-away provision, Reynolds outlined several conditions any purchaser must meet:
- A deposit of 5 percent of the total purchase price must be made.
- If money is borrowed using the assets as collateral, the first $50 million borrowed must go toward the purchase. Of anything above that, half must go toward the purchase and the other half toward making capital improvements on the property.
- The balance must be paid off over five years, with terms over the first four years similar to those of a 9 percent, 25-year loan. The remaining balance must be paid in the fifth year.
Mernick had proposed no down-payment and planned to borrow $80 million against the property, with which he would pay $50 million toward the purchase. The remaining $65 million would have been paid within five years, with the bulk in the fifth year.
PTL filed for bankruptcy protection in June 1987, three months after its founder Jim Bakker stepped aside after admitting having a sexual encounter with church secretary Jessica Hahn.
Bakker's own $172 million bid for the ministry fell through in September when he was unable to raise a $3 million down-payment. He received a further setback last week when Reynolds ordered Bakker, his wife, Tammy, and former aide David Taggart to repay PTL nearly $7.7 million in excessive benefits.
Bakker was not present at the hearing, and calls to Bakker attorney Ryan Hovis' office in Rock Hill were unanswered Wednesday evening.