Judge denies both Reorganization plans, directs parties to return to mediation

| December 29, 2017 | 9 Comments

The Archdiocese of St. Paul and Minneapolis said a bankruptcy judge’s Dec. 28 decision that the archdiocese should return to mediation with the other involved parties “bolsters our resolve to move forward in the bankruptcy process.”

“We look to engage with all participants in mediation as directed by the judge to bring a prompt and fair resolution,” Tom Abood, chairman of the archdiocese’s reorganization task force, said in the statement.

Judge Robert Kressel denied Dec. 28 two competing plans that attempted to resolve the archdiocese’s bankruptcy. He stated that he expected all of the parties to return to mediation.

In a joint memorandum issued to the archdiocese and the Unsecured Creditors Committee, which includes clergy sexual abuse claimants, Kressel said he expected them “to mediate in good faith and I expect [all parties] to reach a resolution which will result in a consensual plan providing appropriate and timely compensation to those who have suffered sexual abuse at the hands of those employed by or affiliated with the archdiocese.”

Abood said the archdiocese is “guided by [Kressel’s] words from earlier this year, that the longer this process continues, the less money will be available for those who have been harmed.”

He added: “We note and are gratified that Judge Kressel has once again directly dismissed the assertions by creditors’ counsel that the archdiocese has acted or is acting in bad faith regarding the reorganization.”

In the memorandum, Kressel expressed concern about the number of abuse claimants who have died since the archdiocese entered bankruptcy in January 2015, and that others may die as the Reorganizations process “drags on.”

According to Kressel, at least eight claimants have died, “essentially depriving them of meaningful compensation for the pain that they have endured.” He emphasized that the bankruptcy case affects actual people, especially those who suffered abuse and those who have to pay for others’ actions.

“While the creditors committee seeks retribution for the wrongs suffered by victims, none of the people who committed the abuse in the first place or exacerbated it in the second place will suffer,” he wrote. “The financial cost of compensation falls not on any of these people, but a completely different group of people. It falls on current employees, including priests, teachers, coaches, and on retired school librarians and others who have worked for the archdiocese and the parishes and earned a modest retirement. The cost may fall on students at Catholic schools and their parents. It will fall on thousands of parishioners. And the cost will be born by beneficiaries of the charity and other good works by the archdiocese and the parishes.”

Kressel said the archdiocese, victims, parishes and insurers must come to an agreement and “put aside their desire to win, and decide to put together a resolution that is fair to all of the people involved.”

“The committee [of unsecured creditors] must put aside its desire for retribution. After all, whatever else the archdiocese is, it is a corporation. Corporations do not suffer; only people suffer,” he wrote. “The archdiocese must put aside its desire to minimize pain, realizing that the personal pain its employees inflicted upon victims is inevitably going to result in financial pain being suffered by a new generation of parishioners and employees.”

Kressel also said that the parishes in the archdiocese might have an obligation to contribute to a final plan, but not because of a legal requirement.

“The fact that the abuse may not be the legal responsibility of the parishes, which they vociferously argue, is hardly the point, any more than their work to help the hungry and homeless are motivated by legal responsibilities,” he said.

Although more than a dozen insurers reached settlements in the archdiocese’s plan for reorganization, they will also need to return to mediation, Kressel said, “in particular, those that reached settlements with the debtor without the agreement of the creditors committee.”

“While there is nothing nefarious about what they did, those settlements have certainly contributed to the creditors committee’s animosity,” he added.

He added that funds for victims’ compensation could also come from their lawyers. All but 39 of the 453 claimants hired an attorney, he said, and “virtually all of them agreed to pay their lawyers one-third or so of their recovery.” He estimated that the attorneys’ fees could run between $30 million and $40 million or more, depending on the final plan.

The plan proposed by the archdiocese would have provided $156 million to victims of abuse, and it would have protected parishes and several Catholic high schools from further lawsuits from past claims of sexual abuse.

In his order denying the confirmation of the unsecured creditors’ plan, Kressel indicated that the plan had unrealistic expectations for funding sources and would protract the bankruptcy, adding that “reliance on litigation is not a realistic method of repayment to creditors.”

“It is not clear whether the committee’s plan is a plan of reorganization,” he wrote. “It is definitely a plan of future litigation. This future litigation will unnecessarily prolong the bankruptcy case, waste the estate’s resources, and delay payments to creditors, the debtor’s discharge and the successful reorganization of the debtor.”

Both plans were presented to creditors for a vote in March. The majority of clergy sexual abuse claimants voted for the Unsecured Creditors Committee’s plan. The majority of the other creditors voted for the archdiocese’s plan.

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  • Robert Ramsett

    Ok, finally some accountability. It’s a great start and amazing that a religious organization has to be forced to do the right/Christian thing. If the Church “leadership” decided to call the police on the offending priests so they would end up in jail for their crimes and fire the bishops who moved the offending priests around, they might be not be in this position.

    • Charles C.

      This has been going on for quite some time, there was no question of accountability just occurring now. We’re past the “start” and coming up to the “end.” The archdiocese has accepted responsibility, the only remaining question involves money for the victims.

      Even if the entire archdiocese, including the parishioners, were tossed in jail this civil suit would have looked pretty much exactly as it does now. Getting money was one of the big goals all along.

      • Robert Ramsett

        But nobody went to jail. Accountability would mean going to jail for rape and conspiracy in addition to this civil suit!!! Since nobody went to jail, time to pay up the big bucks. I’m sure not donating any money for this deal. Maybe they should go hit up Niensted and Flynn to kick in some bucks for this!?

        • Charles C.

          Then it sounds like your problem is with law enforcement. If they had a case, don’t you think they would have pursued it?

          Indeed, the county dropped criminal charges against the Archdiocese. Rape would have been impossible to prove for either of the men, and conspiracy would have been extraordinarily difficult, if not impossible.

          And how many “bucks” would you get from these retired men? Enough to pay the lawyers for an hour?

          Curtis Wehmeyer, the man who molested the children, was sent to jail in 2013.

          • Robert Ramsett

            Charles, apologies if I wasn’t clear. Correct, the criminal charges were dropped at some point. But, isn’t this like the OJ trial where he wasn’t convicted but lost a civil suit? From the outside, it appears OJ was guilty but not enough evidence to send him to jail but enough evidence for a civil suit. Right or wrong, I liken that case to this one. There were many priests that the Archdiocese never considered calling the police about and covered for them as history has shown. They paid off victims but never called the police on them. For me, that is conspiracy (probably not the law but if any bishop paid off victim instead of handing evidence to police, it certainly is something wrong) CW was sent to jail, correct, but it was forced. Remember that Nienstedt, McDonald and Piche wouldn’t tell the police where CW was right away? Why not just hand him over when they knew? Also, it was like pulling teeth to get the secret list of priests with credible accusations from the Archdiocese. Why not just hand over the evidence? My “bucks” statement was because those two bishops had a hand in it and it seems you make the Church out to be the victim, just like they do. So, the victims and the lawyers will get a pile of money from this and the real losers are us. I feel we lose because we put faith and money in men like this. At the minimum, none of it is Christian.

          • Charles C.

            Dear Robert Ramsett,

            Thank you for a very solid post, nicely done.

            I agree with almost everything you’ve said, but I do have one small thing to clear up. I never intend to portray the Church as the victim. The fact that Church leadership really fouled up (I have to watch my language) is beyond dispute.

            I have noticed two things that bother me about some of the posts in the recent threads about Cardinal Law and our Archdiocese. One, I have never seen such hatred and anger here. Not just hatred of the people involved, but for the entire Church. I get the impression that some would rather leave Catholicism than be associated with it. Two, I’m surprised at some who want to inflict as much pain and suffering as is humanly possible on those involved, going so far as to wish these men to Hell and demand that God send them there.

            For me, (and I wasn’t involved as a victim or a perpetrator) the idea is that all of the legal remedies have been or are being pursued. As an aside, I know Judge Kressel slightly. He is very highly regarded, there couldn’t be a better man on the case. The question now is what is to be done in the future.

            For the last several years (I believe a decade) there have been fewer than 10 minors making allegations in the country each year. True, some people are making allegations about what happened 30 or 40 years ago, but in the present climate I think it is safe to say that child sexual abuse has fallen to near zero.

            Add to that the serious programs and training which the Church has instituted makes me hopeful.

            Putting faith and money in men like this? That’s a different issue. I trust the Church, but we are told:

            “Do not trust in princes, In mortal man, in whom there is no salvation. His spirit departs, he returns to the earth; In that very day his thoughts perish.” (Psalm 146)

  • Clyde S

    I think the insurance companies are so dumb to give any parish policies against this. The insurance company writes a policy to insure the parish but doesn’t want to pay out, it’s a business. Nationwide and worldwide, it looks they have a 100% chance of paying out!! It would be like writing an auto insurance policy for a driver who get into an accident every week!

    • Charles C.

      I think you’re exaggerating a bit. Priests were no more likely to be child abusers than men in general. Granted, that’s way too much, but it’s not as likely as you seem to think.

  • Clyde S

    I think that the insurance companies that sell policies to the Catholic archdioceses against this are really dumb – they have a 100% chance of paying out! They are a business and nationwide, they have had to pay out on pretty much every archdiocese. It would be like selling auto insurance to a guy that crashes every week!!