Archdiocese’s bankruptcy expenses explained

| Tom Mertens | October 12, 2016 | 0 Comments

Bankruptcy is complicated and expensive. A Sept. 21 article in the Minneapolis StarTribune about the Archdiocese of St. Paul and Minneapolis’ Reorganization efforts and how much it has cost since we filed in January 2015 painted an incomplete picture, and there are some items that need attention and clarification.

First, it is true that attorneys’ fees have topped $11 million since we filed for Reorganization, but that’s not just for lawyers representing the archdiocese. Under U.S. Bankruptcy Court rules, the organization that files for Chapter 11 is responsible for paying for all of the attorneys involved in representing court-approved committees. That means that the archdiocese also has to pay for lawyers and professionals for the Unsecured Creditors Committee (which represents sexual abuse claimants and others who have filed claims against the archdiocese) and for the Official Parish Committee (which represents all of the parishes in the archdiocese). The figure also includes costs of the court-appointed federal mediator, and court fees and expenses incurred by the official committees.

We are confident that the fees we are paying the attorneys representing the archdiocese are an investment toward a successful outcome of the Reorganization process. Our attorneys continue working with the insurance carriers that have provided coverage over the past 70 years in order to make sure that those who have been harmed receive compensation. Their efforts are bearing fruit.

You may remember that when we filed our plan for Reorganization in May, the proposed trust for victims of clergy sexual abuse was at $65 million. Thanks to ongoing mediation efforts with insurance carriers and the efforts of legal counsel, that number has substantially increased, and by an amount far exceeding any fees that have been paid for their services.

Second, the StarTribune article indicated that the reports filed with the court show that the archdiocese is paying child support. That is inaccurate. We are not paying child support for any priest or employee. The accounting category is set up to reflect that employees’ wages are sometimes garnished to satisfy a personal obligation (such as a school loan or child support), meaning that we are sometimes required to deduct money from that employee’s paycheck and send it to the entity that is owed or the collecting agency. We have not, however, been required to withhold payment for child support since the beginning of the bankruptcy.

Third, while we do pay assessments to the U.S. Conference of Catholic Bishops and the Minnesota Catholic Conference, the $1 million figure cited in the article needs some context. Every diocese in the country contributes to the USCCB based on its size, and the accounting category represents not only the annual assessment, but also the amounts forwarded to the USCCB as a result of our parishes’ voluntary participation in national collections, such as the annual collection for the Retirement Fund for Religious. Parishes send the archdiocese what they collect, and we write one check to the USCCB on behalf of the archdiocese.

Similarly, the archdiocese is assessed a fee for its involvement in the MCC, which is the public policy voice of the Catholic Church in Minnesota and advocates on behalf of social justice issues. All of the dioceses in the state contribute to the MCC, and the bishops who comprise its board decide those fees.

I want to assure you that all of us at the archdiocese work diligently every day to be good stewards of the resources we are given. We are working hard to minimize our expenses and maximize the services we provide for parishes and schools.

Mertens is the chief financial officer for the Archdiocese of St. Paul and Minneapolis.

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Category: The Local Church