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	Hearing on Del. Diocese Bankruptcy Plan Resumes NECN July 14, 2011 http://www.necn.com/07/14/11/Hearing-on-Del-diocese-bankruptcy-plan-r/landing_nation.html?&apID=8fb32fab7ead4022a9efbb4b11b84128 WILMINGTON, Del. (AP) — The chief financial officer for the Roman Catholic Diocese of Wilmington told a federal bankruptcy judge Thursday that the diocese needs to borrow almost $10 million to make its bankruptcy reorganization plan work But Joseph Corsini said the diocese has yet to reach a final agreement with a commercial lender, even as the diocese is asking Judge Christopher Sontchi to approve its reorganization plan. Meanwhile, attorneys for the diocese and its non-debtor Catholic entities did not reveal which real estate holdings of the church would be put up as collateral for the 25-year-loan, which carries a variable interest rate starting at 4.5 percent. When Sontchi asked Corsini which property would be used to secure the loan, an attorney who represents the Catholic Diocese Foundation in the bankruptcy case jumped up and said he represented the Catholic entity in question, indicating that he did not want the property identified in court. Sontchi then met privately with attorneys in his chambers before resuming the hearing to consider whether he will approve the diocese's reorganization plan. The plan centers on a $77 million settlement with some 150 alleged victims of priest sex abuse, with the Catholic Diocese Foundation providing the bulk of the money. In return, the diocese, its parishes and affiliated entities would be released from legal claims related to the church sex abuse scandal. The plan also requires church officials to turn over internal documents detailing how the diocese handled pedophile priests. But Corsini said the diocese needs to borrow money to meet obligations for its lay employee pension plan, and to cover some $5 million in fees for attorneys and other professionals in the bankruptcy case, including a current unpaid fee balance of about $930,000. Corsini said the diocese has a "willing" lender, but that the lender wants the diocese's external auditor to finish a review before entering into a formal loan agreement. He said the auditor's review will take another week or two to complete. If the loan arrangement falls through, the diocese has a backup plan involving a one-year $8.4 million bridge loan at 6 percent interest that has been arranged with non-debtor Catholic entities, which he also did not identify. That loan could be extended another five years with a 2 percent extension fee, Corsini said. Corsini said the difference between the $9.5 million commercial loan and the $8.4 million bridge loan could be made up with internal borrowing from a restricted fund, and that at least one property might be sold if needed. He testified that his financial projections show the diocese could handle the debt service arising from the loans, but that if revenues don't meet projections, the diocese would have to reduce costs through staff reductions and cuts in ministry programs. While the diocese's plan is supported by abuse survivors who constitute its official committee of unsecured creditors, attorneys representing some survivors have accused the diocese of trying to renege on a timetable for distributing money to abuse victims and trying to prevent one parish from being held to a separate $1.7 million settlement it reached with an abuse survivor earlier this year. That survivor, Joseph Curry, reached a $1.7 million settlement with St. Dennis parish in Galena, Md., in January. But Curry could see that agreement voided because the parish entered into it after diocesan officials already had agreed to accept more than $50 million from the Catholic Diocese Foundation to help fund the bankruptcy settlement, on the condition that all parishes would be released from liability. Curry's attorney filed a memorandum Wednesday accusing the diocese of acting with "unclean hands" because Bishop Francis Malooly agreed to the settlement with Curry after having already decided that all parishes, including St. Dennis, would be released from liability in all abuse cases, including Curry's under the plan. "It is undeniable that the bishop with all this knowledge ratified this settlement, which he knew he did not contemplate to be enforceable," wrote Curry's attorney Joseph Benson, adding that the settlement with Curry amounted to "an empty promise." But diocese attorney Robert Brady argued that the reorganization plan is fair, and that Curry is still likely to receive an amount equal to the remaining balance of some $1.6 million from his settlement with St. Dennis. Brady also noted that under the plan, Curry also will be entitled to a share of any litigation or settlement proceeds from sexual abuse lawsuits against Catholic religious orders. Robert Jacobs, another attorney representing Curry told Sontchi that he planned to meet with attorneys for the diocese later Thursday in an effort to settle Curry's objection to the reorganization plan.
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