Archdiocese addresses property values, Catholic Services Appeal in Reorganization hearing

| February 26, 2015 | 0 Comments

Creditors of the Archdiocese of St. Paul and Minneapolis and attorneys for victims/survivors of clergy sexual abuse with claims against the archdiocese sought clarification in a meeting of creditors Feb. 24 on the archdiocese’s financial assets and operations as reported in its Jan. 16 filing for Reorganization under the Chapter 11 bankruptcy code and subsequent required filings.

Thomas Mertens, the archdiocese’s chief financial officer, answered questions under oath at the U.S. Federal Building in Minneapolis, presided over by Sarah J. Wencil on behalf of the U.S. Trustee for Region 12, Daniel McDermott.

The requests for clarification centered primarily on the value of property listed in the filings and about specific payments to various entities during the 90 days prior to the filing.

Mertens explained, for example, that a payment of $221,826 to the Apostolic Nunciature was the amount Catholics in the archdiocese donated at the parish level to the annual Peter’s Pence collection to fund the charitable activities of the pope, and was a “pass through” and not an asset of the archdiocese.

Other payments were regularly scheduled in the archdiocesan 2014-2015 budget, such as payments to the Priests Pension Trust Fund, payments to parishes to support ministry to Latino Catholics, and dues to the Minnesota Catholic Conference.

St. Paul attorney Jeffrey Anderson, representing a group of victims/survivors, asked why the archdiocese included values on some of the properties listed in its filings but not on others.

Mertens explained that the Cathedral of St. Paul has no realizable value as an asset of the archdiocese in part because it is leased to the cathedral parish for $1 a year. A similar arrangement is in place for the land the archdiocese owns on which Catholic high schools Benilde-St. Margaret’s, De La Salle and Totino-Grace are built in St. Louis Park, Minneapolis and Fridley, respectively.

Mertens said no value was included for that land because they are under long term lease arrangements that include the potential for continuation.

Property could be sold

Buildings that the archdiocese listed as assets include three in St. Paul: the chancery office and attached archbishop’s residence at 226 Summit Ave. (valued per county tax assessment records at $6.3 million), the Hayden Center at 328 W. Kellogg Blvd. ($2.4 million) and the Dayton Building at 244 W. Dayton Ave. ($1.4 million).

Mertens said the archdiocese planned to ask the bankruptcy judge for permission to sell the properties. Before any sale could be considered, the request would also have to be approved by the Archdiocesan Finance Council and the College of Consultors.

Anderson also questioned the establishment of the Catholic Services Appeal Foundation in December 2013, asserting that its founding aimed to shelter assets of the archdiocese before the reorganization filing. The organization launched seven months after the State Legislature opened a three-year window in which victims/survivors of clergy sexual abuse could make claims outside of the statute of limitations.

Mertens responded that the Catholic Service Appeal Foundation was created to honor donor intent.

“We had donors who wanted to make sure their donations did not go to attorneys,” Mertens said, but to the specific ministries for which they would donate.

In response to questioning, Mertens said that a separate board of directors decides how Catholic Services Appeal funds will be distributed, and that Archbishop John Nienstedt is not on that board and is not chairman of the board, and the archbishop does not appoint members of the board, who are all lay men and women.

Mertens said he felt confident in responding to the questions.

“When you amass this much data in a short amount of time, there are sure to be some little things that require further clarification at a later date.”

Confirming assets

Before questioning began, Mertens confirmed for the court information contained in the petition for Reorganization. He also confirmed that, since the date of filing, the archdiocese has not transferred any of the assets listed in the filed “schedules,” or reorganization financial reports.

Under U.S. bankruptcy law, an organization that petitions for Chapter 11 protection cannot pay any unsecured creditors after the filing without an order from the court.

The court has allowed the archdiocese to continue normal operations, and Mertens said that the archdiocese has remained current in its financial obligations to employees and vendors. A requirement of the court is that all property listed as assets must continue to be insured, and that monthly financial reports must be filed with the court.

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