Bishop Ian Palmer says the Anglican Diocese of Bathurst will follow the law as it faces a $25 million debt.
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The leader of Anglicans at Dubbo and the western region said the diocese would do what it was legally required to do and use its "best endeavours to repay" funds borrowed from the Commonwealth Bank.
But before that, the diocese plans to defend itself in the courts against the lender's efforts to force it to sell off assets until the outstanding sum is repaid.
The bishop said last week the diocese did not think the demands of the bank were reasonable and that the diocese had a duty to defend properties and gifts given to it in trust.
He maintained that position yesterday while on a visit to Dubbo.
"We're preparing a defence, yes, because the issue is are we at liberty to change the purpose of trust assets in order to pay an unrelated party," he said.
"I have always maintained that we will do what we are legally asked to do, and that we would use our best endeavours to repay what we borrowed and that is the nub of the issue, what is legal, what are our best endeavours."
In legal proceedings, the Commonwealth Bank sent the Bathurst diocese a list of properties to be sold to recoup the money, the Central Western Daily reported on July 17.
At the weekend the bishop asked all parishes to come up with cash to fund an appeal against the bank's court order.
In Dubbo for a regular clergy conference, the bishop remained resolute.
Bishop Palmer said that for decades, "indeed in the case of Dubbo for over 100 years" people had given the Anglican church money, housing and bequests and asked it to use them for the benefit of the community.
"That's why people have given to Holy Trinity church here, because they say it is really important that we love God and love our neighbours as ourselves, " he said.
The bishop said it was trying to protect more than buildings, but also the resource of people it needed for its ministry.
"If we had to sell rectories, we would cease to be able to house a clergyperson in the area," he said.
"And an important thing about a rectory is that it is a public building.
"All sorts of people come to that place in different circumstances of life, and there they're met with warmth and a welcome, and they're met with opportunity for help and sustenance."
He said a loss of resources would be felt throughout the community.
"I want to emphasise the fact the people who would feel it first are the people who are poor, needy, and I don't just mean physically poor... and people who are at transition times in their lives, very vulnerable times in their lives," he said.
"At Dubbo for instance over the past week there have been eight funerals through the Anglican church here and that is contact with so many people who are feeling very fragile, and if our ability to minister to people in those situations was taken away it would have a deep effect upon the whole community."