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Chapter 6
Honoring Financial Obligations Toward Departing Members

In his book, Cities of Light, Swami Kriyananda discusses an early decision involving a member who, prior to leaving, asked to be reimbursed for certain financial outlays. To some community leaders, this request seemed unreasonable. Kriyananda persuaded them to see it differently. 

In that situation, he writes, the highest value was not “reasonableness” but compassion. In the context of departing members, “People are more important than things” meant doing whatever we could to make them feel they had been fairly treated, and that the door was open for them to return.

All land at Ananda Village is community-owned. Departing members who request reimbursement for homes they’ve built are repaid in a lump sum or installments. The first instance of this occurred with the exodus of members after the 1976 fire. Departing members who lost homes received the lion’s share of the post-fire donations, and later, in installments, the full value of their loss.

Chapter 11 Bankruptcy

An even larger exodus took place in the late 1990s after a large court judgment forced Ananda into a Chapter 11 bankruptcy reorganization. By then, Ananda had a householder monastic order. Many of those planning to leave were members of the order and had donated their homes to the community upon taking final vows.

It became apparent, however, that without the return of their investment in Ananda housing, many departing members would lack the funds needed to establish themselves elsewhere. Ananda reconsidered the situation and ultimately agreed to give full reimbursement to any departing member requesting it. A local businessman comments on Ananda’s decision:

I was very impressed with how Ananda handled the “buy-back” of houses from members who were leaving. Many of these people had previously made a religious vow to turn these assets over to Ananda. Ananda gave them an opportunity to reconsider those vows, to revoke them if that was their current decision, and to receive full repayment of their investment in their homes when they left the community. I’ve been in contact with several members who have left the community and none have said anything negative about Ananda.

—Scott Robertson, CPA, Robertson and Woodford, Nevada City, CA.

Ananda’s decision to seek Chapter 11 bankruptcy protection in 1998 bespoke a very challenging time. A highly aggressive judgment creditor was making demands that threatened Ananda’s very survival.

Ananda is not a wealthy organization. Its main assets are the land at the Meditation Retreat and Ananda Village, and the judgment creditor wanted that property. Attempts were made to seize the copyrights to all of Kriyananda’s books, which are not only a source of income for Ananda but one of the main ways Ananda shares Yogananda’s teachings with the world. 

But Ananda clung to its core ideal, “Where there is adherence to truth and right action, there is victory,” and ultimately defeated such tactics. A Nevada City businessman comments on the integrity of Ananda’s approach:

I was impressed with how Ananda handled its Chapter 11 bankruptcy reorganization. Typically there’s a certain amount of desperation associated with a bankruptcy situation, and people hide assets from creditors. Ananda’s financial arrangements are complex, and Ananda could easily have made the reorganization complex and difficult for creditors, even without hiding assets. Ananda did just the opposite. It chose to stand up and make things as clear as possible and to go forward and trust the system. Ananda people showed a detachment and objectivity, when things could have been very emotional.

—Scott Robertson, CPA, Robertson and Woodford, Nevada City, California

One of the main challenges in the Chapter 11 reorganization was to negotiate a settlement acceptable to the judgment creditor, but that also preserved Ananda’s ability to pay other creditors in full, including departing members. Ananda could have developed a plan that called for less than 100% repayment of all obligations, thus reducing the likelihood of any future default, but chose not to. Ananda’s bankruptcy attorney comments:

Throughout the Chapter 11 process, the Ananda leaders acted admirably and with integrity. It was driven into me over and over that we had to do the right thing. Everything had to be disclosed-warts and all, even things that weren’t beneficial to Ananda. There was never any inkling or direction to be “cute,” to play hide the ball, or to be less than candid with any of the individuals or groups involved in the process.

Ananda was facing an aggressive judgment creditor who wanted to push the money aspect so hard as to shake the bedrock of the community. The big challenge was to come up with a solution that recognized Ananda members who had made housing pool contributions as unsecured creditors, and that didn’t reduce their rights.

Since Ananda wanted to do the right thing by its unsecured creditors, it had to settle on terms the judgment creditor would accept. Without a settlement, there would have been an attachment of assets by the judgment creditor. What was developed was fair, honest and equitable.

For a non-profit organization like Ananda, it’s possible to have a Chapter 11 plan confirmed that calls for less than 100% repayment of all unsecured creditors. Ananda’s leaders were never interested in this route. Ananda agreed to a plan that called for 100% repayment.

—Walter Dahl, Dahl & Dahl, Attorneys at Law, Sacramento, California

Urgent Need for Funds

There was a lot of belt-tightening at Ananda in the months following court approval of the reorganization plan. A time came when Ananda urgently needed a sizeable loan and, of necessity, turned to a high-cost lender. The lender who made this loan discusses his dealings with Ananda:

Our company is expensive, but we make money available very quickly. Often clients come to us because of a need for money they hadn’t planned for but which is suddenly right in front of them. They need a certain amount of handholding and help in sorting things out.   

Ananda was different. Ananda was taking responsibility for its situation and wasn’t looking to me for any handholding. I was sure the leaders had thought carefully about what they might be facing in the future and that, from a business standpoint, they had a plan. I had no doubt that the information they gave me was true and accurate.

There’s usually a certain level of anxiety when I make a loan above a half million dollars. With Ananda I didn’t have that anxiety. The whole process was very simple and I felt peaceful. I wasn’t surprised when Ananda repaid the loan in advance.

—Phillip Lester, Broker-Owner, Gold Country Lenders, Grass Valley, California

Individual Financial Commitments

By 2001, the judgment debt had been paid in full — a miracle for sure! Most of the money to pay the legal debts has come from individual Ananda members. There is a motto at Ananda, a truth that has become ingrained over the years: “Many hands make a miracle.” As Kriyananda writes, he didn’t build Ananda alone:

All I did, really, was give it the push it needed. Many hands, many voices, many minds made the miracle that eventually emerged.

Not surprisingly, individual Ananda members also have a track record of honoring their personal financial commitments. A local banking official describes her experience:

I’ve had a 30-year banking relationship with individual Ananda members and the Ananda community. Without exception, the individual members and the community have always honored their banking commitments. When they said they would do something, they did it-they never deviated.

Claudia Scharsmitt, Senior Vice President, Citizens Bank, Nevada City, CA.

Next

Chapter 7: Lawsuits against Ananda