Filed plan outlines funding of archdiocese’s $210 million settlement

| June 29, 2018 | 0 Comments

The Archdiocese of St. Paul and Minneapolis and a committee representing clergy sexual abuse survivors filed a joint Plan of Reorganization June 28.

“The key element of this plan is that it is a consensual agreement among all parties working to resolve the bankruptcy and bring a measure of financial justice to those who have been harmed while also allowing this local Church to continue in its mission,” said Tom Abood, chairman of the archdiocesan Reorganization Task Force and Archdiocesan Finance Council, in a June 28 statement.

Consistent with the settlement announced at the end of May, the $210 million settlement fund includes payments provided by insurance policies held by the archdiocese and parishes over many decades. The documents filed June 28 confirmed about $40 million of the fund will come from additional cash contributions from the archdiocese and parishes and includes cash from the sale of its properties, parishes contributions and a benefits fund.

Under the plan, the archdiocese will contribute nearly $9 million from the sale of three properties on Cathedral Hill in St. Paul and one near Northfield. It will also contribute $5 million over the next five years, which it plans to find through budget cuts and not filling all vacated staff positions. It does not plan to layoff current staff members, according to its leaders.

The archdiocese also plans to contribute $3.5 million in unrestricted cash and $5.7 million from unrestricted and board-designated funds. About $6 million will come from excess reserves in a general insurance fund for the central offices and parishes, and another $4 million will come from excess reserves in a separate trust fund which is a medical benefits plan for the health care costs of employees of the archdiocese and parishes.

Three Catholic high schools — Benilde-St Margaret’s School in St. Louis Park, DeLaSalle High School in Minneapolis, and Totino-Grace High School in Fridley — have also agreed to buy the properties upon which their schools are located and which have long been owned by the archdiocese, for a combined $4 million.

About $3 million will come from voluntary parish contributions, which will not be collected through an appeal, Archbishop Bernard Hebda told Minnesota Public Radio in an interview June 27, the day before the plan was filed. The plan includes a channeling injunction that ends all litigation against the archdiocese, parishes and Catholic entities related to cases that are part of the archdiocese’s settlement.

The settlement will also include about $10 million in unpaid attorneys’ fees for attorneys representing the archdiocese, the parish committee and the Unsecured Creditors Committee, which represents victims, as well as administrative expenses. Other attorneys directly representing abuse survivors are expected to receive about one-third of their clients’ payout, depending on individual agreements.

As a result, the actual total amount that will be paid out to abuse survivors is unclear, but the plan establishes a trust for the funds. Individual settlements will be determined by an independent trustee, not the archdiocese.

The archdiocese and Jeff Anderson, a St. Paul attorney who represents nearly all of the sexual abuse victims who filed claims against the archdiocese, announced May 31 that a settlement agreement had been reached. The settlement is the largest among U.S. dioceses’ abuse-related bankruptcy settlements.

The archdiocese entered bankruptcy in January 2015 as a way to distribute its assets equitably among its 453 sexual abuse claimants. Two competing plans filed by the archdiocese and the Unsecured Creditors Committee were rejected in December by Judge Robert Kressel, who is overseeing the bankruptcy. He asked them to return to mediation to reach a consensual plan.

Archdiocesan leaders hope that the bankruptcy process will be resolved by the end of the year.

“The process continues to move forward as we now seek Judge Kressel’s guidance on the best ways to expedite confirmation of the plan consistent with bankruptcy requirements,” Abood said in the statement. “While the plan we have filed today may be modified and refined as we move toward confirmation in the coming months, we expect the final approved plan will be in substance what we have filed today.”

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