Survivors approve plan; archdiocese expects judge’s approval Sept. 25

| September 24, 2018 | 0 Comments

Clergy sexual abuse survivors voted nearly unanimously in approval of the plan for reorganization filed by the Archdiocese of St. Paul and Minneapolis this summer.

Of the 400 claimants who voted, 398 affirmed the $210 million plan, according to a document the archdiocese filed in U.S. bankruptcy court Sept. 21.

“The archdiocese is grateful for the overwhelming support abuse survivors gave in voting for the joint plan of reorganization,” said Thomas Abood, chair of the archdiocese’s Reorganization Task Force and Archdiocesan Finance Council, in a Sept. 21 statement.

He added: “With this important step concluded, we look forward to the confirmation hearing” Sept. 25, when the archdiocese and attorneys representing survivors are expected to appear before Judge Robert Kressel, who oversees the case.

The creditors’ vote is non-binding, but it is expected to influence a judge’s decision. The strong majority vote for the plan increases the confidence of archdiocesan leaders that Kressel will approve the plan, paving the way for survivors to receive remuneration and the archdiocese to emerge from Chapter 11 bankruptcy.

Abood anticipates that could happen by year-end, he told The Catholic Spirit Sept. 17.

“The overall arc of this thing is important to bear in mind: That after three-and-a-half years of efforts, $210 million is going to be forthcoming to provide a measure of financial justice to survivors of clergy sexual abuse,” he said, “and this archdiocese will be able to continue on with its mission, and it will do so having led the way in reforming the procedures and policies necessary to ensure children and vulnerable adults are safe while in our care.”

The archdiocese and the Unsecured Creditors Committee, which represents survivors, announced May 31 that they had reached a consensual plan. It was a significant achievement in the archdiocese’s bankruptcy process, which began in January 2015.

The archdiocese first announced a $65 million plan in May 2016, which it increased over the next months to $156 million, primarily through insurance settlements. Meanwhile, the UCC filed a competing plan that asserted that the assets of the archdiocese’s 187 parishes and other local Catholic institutions were subject to the Reorganization.

As The Catholic Spirit has previously reported, Kressel ruled that the other organizations’ assets did not legally require consolidation into the assets of the archdiocese. The UCC appealed the ruling twice, but the ruling was upheld by the U.S. District Court in December 2016 and the 8th U.S. Circuit Court of Appeals in April 2018.

Kressel denied both plans in December 2017, ordering the archdiocese and UCC to return to mediation to reach a consensual plan.

With confirmation of the joint plan, the court will likely have until mid-October to hear an appeal to the judge’s order. Once the appeal period expires, the plan is assigned an effective date. Soon after that point, funds will be transferred from their multiple sources into a trust established by the plan for compensating survivors. The funds will be distributed to survivors and other claimants, and the archdiocese will be formally “discharged” from bankruptcy, Abood said.

The plan provides for a trustee to determine the proportion of the funds each survivor receives, based on the nature of his or her claim. The trustee is independent of the archdiocese and collaborates with the survivors’ attorneys, using a point system developed by survivors’ attorneys for evaluating claims.

“We’re not involved in determining who gets what,” Abood said. “And that’s by design.”

Some claimants have opted out of having their claim evaluated and will receive $50,000, the lowest payment allowed under the plan.

A portion of the funds will be reserved for a certain period for new, eligible claims that would have fallen within the parameters of the bankruptcy but, for legitimate reasons, were not able to be brought forth before the claims deadline, Aug. 3, 2015.

The archdiocese filed bankruptcy in response to mounting claims of clergy sexual abuse following the establishment of the Minnesota Child Victims Act, which lifted the state’s statute of limitations from May 2013 to May 2016 on claims of sexual abuse of minors.

As part of the plan, the archdiocese has agreed to pay $1 million annually into the trust for the next five years. “One thing that we will not do is raise [parish] assessments to make this payment,” Abood said.

The $210 million joint plan is the largest ever reached in a bankruptcy case related to clergy sex abuse, and its $170 million insurance contribution is the largest from insurance carriers in the history of Catholic bankruptcy settlements.

 

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