$600K in fees OK’d in sex abuse-related case

By Olivier Uyttebrouck
ABQ Journal
September 2, 2014

http://www.abqjournal.com/455359/news/600k-in-fees-okd-in-sex-abuserelated-case.html

The Diocese of Gallup had racked up more than $600,000 in court-approved fees for attorneys and accountants by April 30, during the first six months of the diocese’s bankruptcy case, court records show.

The diocese last year became the nation’s ninth Roman Catholic diocese to file for Chapter 11 reorganization bankruptcy in response to a growing number of lawsuits filed by alleged victims of clerical sex abuse.

A total of 56 people have filed claims alleging they were abused by priests in the diocese. Aug. 11 was the deadline set by U.S. Bankruptcy Court Judge David Thuma to file a claim.

Attorneys for both the diocese and the claimants are required to submit interim applications for payment every six months for Thuma’s review.

Thuma has approved payments to three law firms and one accounting firm hired by the Diocese of Gallup.

James Stang, a Los Angeles attorney representing claimants against the diocese, said he was hired within the past six months and has not yet submitted his first interim application for payments.

Stang and Susan Boswell of Tucson, Ariz., lead attorney for the diocese, both said Friday they have not yet received any payments for services. Stang said in Catholic church bankruptcy cases, attorneys typically receive payment after the judge approves a final reorganization plan.

The judge has the authority to deny or reduce fees, Stang said. But attorneys typically receive most or all of the payments they request, he said.

“In bankruptcy practice, the fees that are sought are approved at a very high percentage of the request,” Stang said. “In terms of the court lopping off fees, in most commercial bankruptcy cases that is rare.”

The Diocese of Gallup has said repeatedly in court records and in bankruptcy hearings that it is among the poorest dioceses in the nation.

Its assets “are very relevant to what can be paid” to claimants, Stang said. But he predicted claimants ultimately will receive “meaningful” cash payments from the diocese.

“I am confident that there will be a meaningful distribution to creditors and survivors,” Stang said. “Obviously, no money really makes up for what has happened to these people.”

Attorneys now are determining the assets of the Diocese of Gallup, primarily from insurance policies and real estate holdings, he said.

Neither Stang nor Boswell predicted when attorneys may submit a reorganization plan to the court.

Thuma in June authorized payments to four firms for fees and expenses:

⋄  Quarles and Brady, a Tucson law firm, $450,601.

⋄  Keegan, Linscott & Kenon, a Tucson accounting and financial consulting firm, $135,293.

⋄  Walker and Associates, an Albuquerque law firm, $18,062.

⋄  Stelzner, Winter, Warburton, Flores, Sanchez and Dawes, an Albuquerque law firm, $4,819.