Parishes" Assets Targeted in Archdiocese Bankruptcy Case
By Annysa Johnson
Lawyers for sexual abuse victims and other creditors in the Archdiocese of Milwaukee bankruptcy case telegraphed Thursday they intend to go after individual parish assets and proceeds from the archdiocese's $105 million Faith in Our Future campaign. The strategy is sure to reverberate in pews across the 10-county archdiocese. Archbishop Jerome Listecki has maintained that parishes, schools and the Faith in Our Future fund would not be affected by the bankruptcy. The archdiocese appeared to stand by that Thursday, calling any claims to pursue those assets frivolous. However, lawyers for the creditors committee at a status hearing in the case said they plan to sue to: Consolidate the assets and liabilities of parishes in the archdiocese for the purpose of determining its estate - the money that would be available to fund settlements and allow the archdiocese to remain in business. Parishes have been incorporated separately from the archdiocese for more than a century, according to the archdiocese. Determine the ownership of the archdiocese's headquarters building, the Cousins Center. The archdiocese had said for years that it planned to sell the building to fund sex abuse settlements but now claims it does not own it. Determine whether the use of the archdiocese's donor lists and good will by the Faith in Our Future campaign amounted to a fraudulent transfer. Pursue what could be millions of dollars in newly discovered insurance coverage. At least one parish priest said he was not surprised by the move to go after parishes, but he did not think it would be successful. He also suggested it might backfire for abuse survivors. "Right now, there's a fair amount of sympathy for victims. But that could evaporate if they become intent on getting the parishes involved," said Father Alan Jurkus of St. Alphonsus Catholic Church in Greendale. Thursday's hearing was the first since a court-ordered mediation aimed at reaching a settlement broke down this month. Judge Susan V. Kelley voiced disappointment in the outcome. She laid out an aggressive schedule for tackling the outstanding issues in the case, including the archdiocese's efforts to throw out what could be hundreds of victims' claims for compensation, and a pending lawsuit over whether $57 million in a cemetery trust could be used to pay settlements. "I continue to believe that a negotiated settlement is going to be the best resolution for everyone here," she said. Kelley set an Oct. 31 hearing to determine whether the creditors committee should be allowed to sue to recover $35 million in parish funds that were transferred off the archdiocese's books in 2005. Victims say those parish deposit funds, along with the money in the cemetery trust, were moved to shield them from victims. Thursday's hearing also brought back into play the possibility that insurance might be available to pay claims. Wisconsin courts have determined that the archdiocese could not tap its insurance to fund sex abuse settlements because they involved alleged fraud. However, a special insurance attorney hired by the creditors committee maintains that those rulings were based on contracts with one insurer, Beacon One. Two others, Lloyd's of London and Stonewall Insurance - its name drew laughter in the usually staid courtroom - could be liable based on the language in their contracts, said creditors committee attorney James Stang. "Focusing on insurance is the best avenue for resolving the three goals of the bankruptcy" - compensating victims, establishing greater abuse protections and returning the archdiocese to ministry, Stang said. Lawyers for the archdiocese dismissed that approach as time-consuming and costly. "The cheapest, most efficient way to move this case along is to get the claims decided," said archdiocese attorney Frank LoCoco.
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