Bankruptcy judge: Accusations that archdiocese hiding assets false

| June 3, 2016 | 0 Comments

Accusations that the Archdiocese of St. Paul and Minneapolis is trying to shield assets or mislead the court in its plan for Reorganization are “not at all helpful” and “not true,” a U.S.  bankruptcy court judge said during a June 2 hearing.

Judge Robert Kressel was responding to a motion filed May 23 by Robert Kugler, who represents sexual abuse victims in the archdiocese’s bankruptcy proceedings, for the court to consolidate the archdiocese’s assets with those of parishes and other separately incorporated Catholic entities in order to increase the monetary remuneration to victims. The motion anticipated the archdiocese’s May 26 filing of a plan for reorganization, in which it listed available assets at $65 million, most of which would be used to compensate victims.

Jeff Anderson, a St. Paul lawyer representing more than 380 victims of clergy sexual abuse with claims against the archdiocese, held press conferences May 24 and May 26 accusing the archdiocese of shielding funds by not including the assets of separately incorporated entities such as Catholic Charities, the Catholic Community Foundation, and schools and parishes.

Archbishop Bernard Hebda speaks to media May 26 following the filling of a plan for Reorganization by the Archdiocese of St. Paul and Minneapolis. Dave Hrbacek/The Catholic Spirit

Archbishop Bernard Hebda speaks to media May 26 following the filling of a plan for Reorganization by the Archdiocese of St. Paul and Minneapolis. Dave Hrbacek/The Catholic Spirit

Speaking at a separate press conference May 24, Archbishop Bernard Hebda rebuked the accusations, saying the archdiocese had no legal right to the other entities’ assets. He also stated that the archdiocese has followed all of the rules set forth by the court and all directives from the judge.

Addressing attorneys from the archdiocese and its creditors June 2, Kressel expressed disapproval of the accusations.

“The motion that the committee made nowhere mentions anything about hiding assets or misleading the court,” he said. “Of course, the whole premise of the motion made is that these aren’t the archdiocese’s assets. They’re someone else’s, and you want them consolidated. Making accusations like that in public are not supported by the motion and are not helpful to proceeding forward.”

Kressel asked for “more cooperation among the lawyers . . . and a little restraint about what people say about the case and about this motion.”

Kressel said that he would hear motions related to the May 23 motion July 7. Legal issues related to the motion, he said, include whether the unsecured creditors’ committee, which Kugler represents, has standing to file the motion and whether substantive consolidation of assets of the archdiocese with “non-debtors” is legally possible. He also indicated that there may be some legal issues with the archdiocese’s plan for reorganization as filed.

The judge also denied for the time being an application of the unsecured creditors’ committee for authority to retain Deloitte, a St. Louis-based financial consulting firm, to investigate the archdiocese’s assets. He cited the expected high expense and the importance of resolving legal concerns before involving Deloitte, which may result in “inappropriate poking around to find out stuff that they [the court] may never need.”

“There will be a settlement,” he added. “I know we’re going to fight. I guess that’s the mood we’re in now, but we all know there’s going to be a settlement and a consensual plan. And the question now is how much money we’re going to spend doing that. One of my goals is to proceed expeditiously but also keep the costs down.”

Judge Kressel said that if the committee felt it later needed to make the case for help with discovery, it could reapply to the court to retain Deloitte’s assistance.

Charlie Rogers, an attorney of Twin Cities-based Briggs and Morgan, which represents the archdiocese in the bankruptcy proceedings, said the hearing “affirmed that the judge, along with [Archbishop] Hebda, agrees that there is nothing sinister going on here, that the archdiocese is not hiding assets. Instead, there is a legal dispute about whether or not the separate corporations should be merged into the bankruptcy.”

Jeff Anderson and Associates declined to comment for the story.

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