Court hears objections to Reorganization plans

| June 19, 2017 | 1 Comment

A U.S. bankruptcy court judge heard objections June 15 to two competing plans for the Archdiocese of St. Paul and Minneapolis’ Chapter 11 Reorganization.

The plan proposed by the archdiocese would provide $156 million to victims of abuse. The plan proposed by the Unsecured Creditors Committee, which includes clergy sexual abuse claimants, would provide uncertain and speculative amounts to claimants and would involve years of litigation, according to attorneys for the archdiocese.

In considering the Unsecured Creditors Committee’s objections to the archdiocesan plan, Judge Robert Kressel questioned whether UCC counsel Robert Kugler was trying to “inflame” his clients with misleading claims about the archdiocese’s plan and assets.

“Accusing the debtor of not complying with bankruptcy code or of bad faith is not a way to resolve differences of opinion,” Kressel said. “You have to state the facts, not what you think is implied.”

Documents the UCC filed ahead of the hearing contained false and misleading statements about the archdiocese, including allegations that it is hiding $1 billion in assets. After the archdiocese’s attorneys objected, UCC counsel filed a document with the court attempting to retract the statements.

The accusation that the archdiocese is hiding assets “is obviously false,” said Charles Rogers, an attorney representing the archdiocese, following the hearing. “We need to get to the real issues that bar a consensual plan or a plan ordered by the court. … [The archdiocese’s] plan calls for $156 million for victims that will be available in the short term without a lot of speculation. Their [the UCC] plan calls for basically a liquidation of the archdiocese and years of litigation with speculative results.”

Attorneys representing the archdiocese presented 21 objections to the UCC’s plan questioning its legality. Judge Kressel also heard from attorneys representing parishes, insurers, Catholic schools and other Catholic institutions objecting to aspects of the UCC plan, including the plan’s aim to secure additional funds through parish assessments.

Richard Anderson, a Briggs and Morgan attorney representing the archdiocese, said the archdiocese legally cannot compel parishes to provide those funds. He also said that the UCC’s request that the bankruptcy court independently value the archdiocese’s assets “goes way beyond anything a bankruptcy court ought to be asked to do” and stated that the UCC’s plan is “based on an illusionary source of financing … based on speculation.

“The funds will not be available, and the committee knows that,” Anderson said.

During the hearing, Kressel determined which objections warrant written briefs. They will be heard in court Aug. 29.


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