Victims seek $80M from archdiocese in Reorganization plan

| August 26, 2016 | 0 Comments

Three months after the Archdiocese of St. Paul and Minneapolis filed a plan for Reorganization in its bankruptcy proceedings, the committee representing sexual abuse claimants filed its own plan Aug. 22 that seeks approximately $80 million in compensation from the archdiocese.

The plan calls for the archdiocese to contribute assets totaling $80 million, including a requirement that the archdiocese obtain a loan of approximately $38 million for deposit into a trust for sexual abuse claimants. St. Paul attorney Jeff Anderson, who represents some of the victims/survivors, claimed the archdiocese should be able to borrow $38 million secured by mortgage against the Cathedral of St. Paul, and three Catholic high schools — Benilde-St. Margaret’s in St. Louis Park, DeLaSalle in Minneapolis and Totino-Grace in Fridley.

In the archdiocese’s plan for Reorganization — which it filed May 26 — it identified more than $65 million in assets to be available to compensate victims of clergy sexual abuse, with the potential for that amount to grow.

In a statement released Aug. 23, Archbishop Bernard Hebda said the archdiocese’s goal of a “fair and just resolution for all” remains the same.

“The judge has asked all parties to negotiate in good faith, and that is what we are endeavoring to do,” Archbishop Hebda said.

In July, a U.S. Bankruptcy Court judge ruled that the estates of parishes and other Catholic entities should not be consolidated with those of the archdiocese as it seeks to compensate clergy sexual abuse victims as part of its bankruptcy resolution.

The ruling responded to a motion filed in May by attorney Robert Kugler, who represents the unsecured creditors committee. Kugler asked the judge to substantively consolidate the archdiocese’s assets with those of other Catholic institutions with ties to the archdiocese, such as Catholic Cemeteries, the Catholic Community Foundation and several Catholic high schools. The committee has appealed the decision.

The archdiocese’s plan outlines specific sources for funds available for victim remuneration, including at least $8.7 million from the sale of archdiocesan properties, including three chancery buildings on Cathedral Hill, as well as more than $33 million from insurance settlements. It establishes a trust for sexual abuse claimants, with a court-approved allocation protocol.

The plan also includes settlements from parish insurers of approximately $13.7 million with the potential for future settlements from archdiocesan insurers that have not yet entered into agreements with the archdiocese. The archdiocese is seeking to transfer the rights of recovery for those policies to the trust for the benefit of sexual abuse claimants.

Upon filing its plan, Archbishop Hebda said the archdiocese did so with victims/survivors in mind.

“The longer the process lasts, more money is spent on attorneys’ fees and bankruptcy expenses, and, in turn, less money is available for victims/survivors,” he said May 26. . . . “We are submitting our plan now in the hope of compensating victims/survivors and promoting healing sooner rather than later.”

The bankruptcy court allowed the archdiocese to be the sole party to file a plan for Reorganization until May. Other parties, including creditors, were able to file a plan after the exclusivity period ended.

The court is slated to hear both plans Dec. 15.

The archdiocese filed its plan a day after the deadline for filing decades-old sexual abuse claims under the Minnesota Child Victims Act, which the State Legislature passed in 2013. The law lifted for three years the statute of limitations for child sexual abuse civil suits.

The lifting of the statute ushered in a wave of claims against clergy who had been or were serving in the archdiocese, leading the archdiocese to enter bankruptcy in January 2015 as a means to distribute assets equitably and fairly among victims. By a court-established claim deadline in August 2015, more than 400 claims of clergy sexual abuse had been filed against the archdiocese.

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