Victims' agency is rescuing itself
A bankruptcy court judge will rule, perhaps as early as Wednesday, on a financial reorganization plan submitted by a family resources agency that serves more than 3,000 clients from across the region.
Brockton Family and Community Resources Inc. has proposed a restructuring - a rare move for a nonprofit - that would pay off the agency's debt, some $700,000. Most of the agency's creditors have approved the plan. All that remains is for a judge to give the seal of approval.
"We're here to stay," said a hopeful Patricia Kelleher, executive director of the organization.
The agency - which for 40 years has been counseling victims of violence, particularly domestic abuse - filed for federal bankruptcy protection last year in the face of rising debt. The money was owed mostly to state and federal governments for delinquent payroll taxes. The federal government had placed a lien on a building the agency owns on New town Street.
Kelleher said the bankruptcy filing was not a death sentence for the agency. Rather than shut down, as most nonprofits do in a similar situation, it proposed a restructuring plan to organize its finances and pay off the debt. The process has helped streamline services, letting the agency get back to its core agenda of providing counseling for victims of crime and trauma, she said.
"We spent a lot of time really looking at what we focus on, what we do best," Kelleher said, "to continue to provide services to victims of crime."
The reorganization started after the agency first forecast its financial troubles some three years ago. Funding from state agencies was dwindling. A mental health clinic the agency ran needed to cut costs. In the meantime, the organization was unable to pay payroll taxes for its employees.
The Internal Revenue Service and the state Department of Revenue filed liens against the agency. And, other debt began mounting.
In response, said Kelleher, said the agency reorganized its mental health clinic and laid off 20 people in a staff restructuring.
Kelleher said the agency also arranged to sell a building it owns on Newton Street, to cover the remaining debt. However, the sale was not completed, and the debt to state and federal governments continued to increase. The agency was then forced to file for bankruptcy, she said.
Under the reorganization plan, the agency still owes the IRS $568,157, the Department of Revenue $94,961, and the state Division of Unemployment Assistance $42,031. Other unsecured creditors are also owed tens of thousands of dollars.
The organization has proposed paying the government agencies over a five-year period. Also, the unsecured creditors would receive a share of a total of $36,000, to be paid over a three-year period. The organization promises to put $1,000 a month into an account to pay the $36,000. Also, the agency will continue to pay off the $98,312 mortgage remaining on its Newton Street property.
The agency's lawyer, David B. Madoff of Madoff & Khoury, of Foxborough, said the repayment is based on expected revenue, not fund-raising or one-time sources of funding.
The organization receives revenue from contracts to provide services with state agencies, such as the Department of Social Services. None of the payments will come from those contracts, as funding must be used for the services specified in the contract. However, the agency also receives revenue from the billing of health insurance companies representing its clients. With other cost-saving measures, the agency has prepared a budget that will allow it to pay off the debt over five years, without interfering with core services. Under the proposal, the agency would have to pay some $15,000 to $20,000 a month over the next five years, separate from any money it spends on services or employees.
The agency, with some 50 workers, serves Brockton and 45 other communities across the region south of Boston, Kelleher said.
Its services are vital at a time when domestic violence-related homicides and other types of abuse are spiking across the state, particularly in the Brockton area, said Mary Lauby, executive director of Jane Doe Inc., a coalition of agencies that serve victims of domestic abuse.
"That they have found ways to keep that program alive, and services available in the community, but also be really creative in trying to meet the needs of desperate families, is to their credit," Lauby said. "I give them credit for finding a way to stay alive. . . . The local programs really are the central nerve center for victims of domestic violence and their families."
Milton J. Valencia can be reached at valencia@globe.com. 