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Historic Community House in Birmingham files for bankruptcy

Posted By: Detroit Free Press on March 27, 2026.  For more information, please click here to read the source article.

The Community House Association, a Birmingham nonprofit caught in a legal dispute with the city it was created to benefit, has filed for bankruptcy protection, a move that could complicate what happens next to the organization — and the multimillion-dollar house it owns, but now wants to sell.

“This was a necessary next step in moving toward the sale of the building, which is imperative to address the cash flow challenges the organization will face after June 30,” Jacob Taylor, the Community House board chairman, told the Free Press late Thursday, March 26, in a written statement. He added that ongoing litigation “has prevented the timely sale of the building and has made bankruptcy necessary.”

The Jewish Federation of Detroit pulled out this week of a deal to buy the property.

The Chapter 11 bankruptcy petition, filed Thursday in U.S. Bankruptcy Court in Detroit, however, will allow the nonprofit to continue operating while attempting to pay employees and creditors under a court-approved plan.

But finding revenue to continue operations and paying off the millions in debt the association took on in the last couple of years is not the only challenge the nonprofit faces.

How the nonprofit got into debt

Founded more than a century ago, the organization had touted for years that in the early 1920s, the community turned “a small frame structure” into an “extraordinary place where all would be welcome.”

Since 1990, the association said in its filing, it has operated a childcare center, which now serves 42 children but is licensed for 100. In 2012, it added a full-service banquet facility.

The nonprofit now employs 38 people, 24 full-time and 14 part-time.

And a lawsuit brought by the city of Birmingham in Oakland County Circuit Court against the association, which the nonprofit implied forced it into bankruptcy, presents a crucial question that the court will have to answer: How do deed restrictions on the 38,500-square-foot limit the house’s ownership?

Depending on the restructuring and the court’s decision, restrictions also may present a challenge for the association’s biggest creditor: Rochester Hills-based Chief Financial Credit Union. In late 2024, the association took out a $900,000 term loan and two revolving lines of credit of $600,000 each.

The debt was borrowed against the house, appraised in 2024 at about $7 million.

The city’s lawsuit against the nonprofit

For many, controversy about The Community House — or Birmingham Community House to some — surfaced in early November, when the organization announced that it planned to sell the house and use the proceeds to start a community foundation.

The news upset some Birmingham residents, who openly opposed the sale, and they began organizing meetings and making plans “to save The Community House.”

In addition, city officials, including Birmingham Mayor Clinton Baller, expressed concern and began meeting in sessions closed to the public. Later, residents and officials began asking questions about the historic house’s deed restrictions.

The sale limitations were put in place — written into the deed decades ago — presumably to ensure that the property, and the house, would always be used by the community.

The city sued the nonprofit in Oakland County Circuit Court to stop the sale.

On Friday, March 27, Kathleen Devereaux — a longtime Birmingham resident who said that she took classes at The Community House years ago — said she was shocked to learn of the bankruptcy filing.

“I basically think this is a delay tactic,” she said, speculating that the nonprofit believes it will win the lawsuit and will seek to sell the property to someone who will pay more for it. “They are stubbornly hanging on to their original aim.”

Mounting financial pressures

Officials also began discussing the possibility of buying the property to use as a community center, and the nonprofit confirmed that the city made an offer on the building, which was below the appraised value, earlier this year.

The Free Press left a message with Baller.

On top of all of that, as the Free Press and other news outlets and community groups pressed the organization to detail why it was transforming into a foundation, the association’s leadership acknowledged the nonprofit’s revenue model — which relied on renting meeting space and banquet services at the house — was “not sustainable.”

Some residents have questioned whether there was mismanagement.

In a previous interview, association executives also told the Free Press they were concerned that the ratio of income from what the Internal Revenue Service calls unrelated business income, like its banquet and rental services, was too high and could threaten the organization’s tax-exempt status.

The Oakland County case, according to the bankruptcy filing, is set for trial in 2027.

Declining revenue, rising expenses

For decades, The Community House has been a place to promote what a Michigan lifestyle magazine called “social, civic, and philanthropic life.” Residents have told the Free Press they view it as a special place in the tony suburb where important moments — like birthdays, weddings and retirements — are celebrated.

The association’s bankruptcy documents note that the association’s history dates to 1920, when the Rev. Charles McCurdy of St. James Episcopal Church set up a committee to reorganize the St. James Women’s Guild and draft bylaws for a new “community house” organization.

The group later incorporated, and in 1930, it opened the house to the public at 380 S. Bates. Over the years, residents have said, the house has been expanded and modified.

The bankruptcy filing, however, suggests problems may have been even worse than previously disclosed, although it did not go into significant details of how it happened.

According to the documents, for “the past seven years,” the association’s revenues have been falling while its expenses have risen. To address this, the documents said, the association drew down its savings.

Since November 2024, the court documents said the nonprofit has faced “significant cash-flow” issues. That’s also when other records obtained by the Free Press show the association took out the loans.

In 2025, the petition said, 73% of the events and meetings were being booked by people and businesses from communities outside Birmingham, and only about a third of the philanthropic dollars coming in originated from Birmingham residents.

What’s next for The Community House

With the bankruptcy filing, some families using the childcare program now fear that it is at risk, with potential staff cuts, or worse, that it could be abruptly shut down with few alternate options.

In addition to the house, the association listed at least $675,000 in assets, most of which were artwork appraised at $450,000.

As for debts, Crain’s Detroit Business reported and the nonprofit confirmed, that in addition to the more than $2 million in credit union loans, the association also owes more than $1 million in unsecured credit.

But by borrowing against the house, if the nonprofit can’t pay what’s owed, the credit union can try to recover the loan by placing a claim on the property and trying to sell it, which is usually a lender’s last resort.

Court documents, however, show the underlying balance on one of the lines of credit — $600,000 — is due at the end of June, which, it now appears, is why the association announced last fall it wanted to sell the house.