By Beth Miller
News Journal
July 28, 2011
http://www.delawareonline.com/article/20110728/NEWS01/107280350/Progress-bankruptcy-case
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| Thomas Neuberger said his clients will sign releases after settlement payments. |
WILMINGTON -- The problems that two weeks ago appeared most threatening to the Catholic Diocese of Wilmington's bankruptcy case appear to be resolved.
In a hearing Wednesday before U.S. Bankruptcy Court Judge Christopher Sontchi, attorneys for most survivors of clergy sexual abuse said their clients will release the diocese and parishes from any further litigation after the plan is approved, meeting one of the terms of the $77.4 million settlement agreement reached earlier this year.
Diocese attorneys, in turn, agreed to comply with Sontchi's ruling two weeks ago, prohibiting formal "sustenance" payments and benefits to any living priests named in the scores of lawsuits that prompted the diocese to seek Chapter 11 protection in October 2009.
In his earlier ruling, Sontchi was uncompromising in his objection to such payments, saying the question "goes to the heart of this case" and including those payments showed the diocese was not negotiating in good faith.
Bishop W. Francis Malooly has said he would oppose such payments, but might be required by canon law -- the Catholic Church's official code -- to provide the support. Diocesan attorneys earlier this month argued that a civil court could not constrain the church's charitable acts without violating First Amendment protections.
Wilmington attorney Thomas Neuberger, whose firm represents the majority of survivors, said the diocese proposal on "sustenance" payments includes a paragraph that amounts to "a roadmap for how to go about avoiding the injunction" but said he would accept Sontchi's decision on that and not extend the battle if the judge accepted that paragraph.
Anthony Flynn, one of the attorneys for the diocese, said the diocese was making clear that the court-approved plan is binding on the diocese as a civil corporation and on Malooly as its chief executive officer.
That could leave other avenues -- private groups or other non-diocesan entities -- to provide for the priests if they wished to do so.
The case is back in Sontchi's courtroom this morning to resolve that and a handful of other issues, produce a final draft of the plan, and, perhaps, get the judge's signature.
Even if final agreement is reached today, though, attorneys said it may take a few days for final documents to be drafted, reviewed and signed. Once the plan is approved by the court, a 60-day clock starts ticking for payment to survivors.
"We've made very substantive progress," Flynn said. "There are a number of things that have to be addressed. We don't anticipate any problems ... but tomorrow could be a long day."
Two weeks ago Sontchi said he would not approve a plan without guaranteed funding from parishes, insurance companies and other sources -- a guarantee those entities wouldn't make until they had a final court order, with assurances that the abuse survivors would release the diocese and parishes from any further liability.
Wednesday, diocese attorney Robert Brady said agreement had been reached to release settlement money to a trust fund when releases were signed.
Neuberger said all of his clients would sign the releases. James Stang, a California-based attorney who represents the Official Committee of Unsecured Debtors which includes most of the other survivors, said he had not seen the new agreements, but believed his clients, too, would sign releases.
Several survivors are not represented by attorneys, though, and Stang worried that "142 people's checks" could be held up because those remaining claimants had not signed releases -- perhaps only because they could not be found. Stang said stale phone numbers and addresses could delay the process.
"We don't want to see the tail wag the dog here," he said.
Contact Beth Miller at 324-2784 or bmiller@delawareonline.com.
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