Bankruptcy Details for St. Paul-minneapolis Archdiocese

Seattle PI
January 16, 2015

http://www.seattlepi.com/news/article/Bankruptcy-details-for-St-Paul-Minneapolis-6020591.php

ST. PAUL, Minn. (AP) — The Archdiocese of St. Paul and Minneapolis filed for bankruptcy protection Friday in what's become a common move for dioceses around the country facing heavy financial pressure from sexual abuse claims. Some questions and answers about the news:

WHY DID THIS HAPPEN?

Minnesota state lawmakers opened a floodgate of new litigation with a legal change in 2013. It opened a three-year window setting aside the statute of limitations on sexual abuse, allowing attorneys to file claims that in some cases were decades old. In addition to some two dozen lawsuits filed since then, attorneys have given notice that more than 100 cases could also be filed. The archdiocese recognized it didn't have enough assets to pay all potential claims and keep operating.

WHAT HAPPENS WITH ALL THOSE LAWSUITS NOW?

All victims' lawsuits, including a few cases that are scheduled for trial later this month, will be halted and they will fold into the Chapter 11 reorganization process. The victims become creditors, and can look to payment from the archdiocese's assets and insurers.

WHAT WILL VICTIMS GET?

Good question. Friday's filing gave only a broad range of church assets (between $10 million and $50 million, with much more in liabilities). Some attorneys say the bankruptcy process can open a path to assets that might have appeared to be off-limits to abuse victims. It's unclear if that will happen in the archdiocese case. Typically, payouts in bankruptcy court come from church assets and insurers. The archdiocese recently sued several of its insurers, asking a federal judge to order that the carriers cover claims and legal fees.

Victims will likely get different amounts, depending on the severity of abuse and harm suffered. It would likely be up to a trustee or creditor's committee to allocate funds.

WHAT'S THE REACTION?

Some attorneys are OK with it. Jeff Anderson, who brought many cases against the archdiocese before an October settlement that put his firm in a collaborative role with the archdiocese in terms of creating a safer environment in the church, said it's necessary and is the best way to put victims first. Mike Finnegan, an attorney in Anderson's firm, says the bankruptcy won't stop them from disclosing priest files and keeping a close eye on the archdiocese.

But Patrick Noaker, an attorney for other abuse victims, was upset that the filing halted upcoming legal proceedings. He said it keeps him from eliciting information in court that could help protect young people in the future.

Church officials say the filing isn't intended to avoid embarrassing revelations. They say if that was their goal they would have filed before thousands of documents were disclosed and high-ranking officials gave depositions in a high-profile case.

HOW ABOUT THOSE IN THE PEWS?

The archdiocese says the filing won't have a material effect on the faithful. Parishes and schools are incorporated separately from the archdiocese's central business office. Attorney Charlie Rogers, who is working for the archdiocese, said the day-to-day church operations should continue, while the bankruptcy proceedings operate in the background.

ANYTHING ELSE?

Yes. Bankruptcy is expensive. The archdiocese has already paid $380,000 to a consultant since it began exploring bankruptcy last summer, and the documents filed Friday show those consultants are in line for hourly rates ranging from $285 to $495 for a legal process that could take quite a while. The archdiocese's attorneys are giving a 10 percent discount, so their hourly rate maxes out at $472.50.