Archdiocese might sell chancery to fund creditors, official says

By Elizabeth Mohr
Pioneer Press
February 25, 2015

http://www.twincities.com/localnews/ci_27591733/archdiocese-might-sell-chancery-fund-creditors-official-says

The Roman Catholic Archdiocese of St. Paul and Minneapolis moved funds in the year before it filed for bankruptcy protection, but it was not an attempt to avoid paying victims of clergy sexual abuse, its chief financial officer said Tuesday.

Rather, Thomas Mertens said during a hearing in the U.S. Trustee's office, the establishment of the Catholic Services Appeal Foundation was "to honor donor intent."

Parishioners expressed concerns about their donations being used to pay for legal expenses related to claims of sex abuse, Mertens said. So the independent fund was established to assure donors that their money would be used only for ministry programs.

Mertens also said the archdiocese "will consider whether we would sell" its chancery office and three other properties to help pay creditors.

Besides the chancery offices on Summit Avenue, which are connected to the archbishop's residence at 226 Summit Ave., the other properties are the Msgr. Ambrose Hayden Center at Mulberry Street and Kellogg Boulevard, which houses its Office of Family, Laity, Youth & Young Adults; the Dayton Building at 244 Dayton Ave.; and a residence in Northfield.

Mertens' testimony was part of the first meeting of the committee of creditors at the U.S. Courthouse in Minneapolis as part of the archdiocese bankruptcy proceedings.

Attorney Jeff Anderson, who represents some victims of clergy sexual abuse, was one of four people who peppered Mertens with questions about the church's bankruptcy filings and financial disclosures.

"The whole bankruptcy process is designed to scrutinize whether there's a full and complete disclosure," Anderson said after the hearing. "This is a preliminary disclosure. All you do at this first meeting is ask questions about the disclosures they've made and try to fill in the blanks."

Anderson said he felt Mertens answered the questions the best he could, but said there will be more opportunities to ask questions as the case moves forward, primarily in the mediation process, which is confidential.

"But in terms of just being able to assess the true assets, the true values of the holdings of the archdiocese, we got a better picture than we had before," Anderson said. "I think it's progress and I think it's positive."

The archdiocese filed for Chapter 11 reorganization Jan. 16, making it the 14th Catholic organization to file bankruptcy. Church officials called it the best option to address pending and future claims of clergy sexual abuse "fairly and with finality."

The local archdiocese faced numerous lawsuits from victims of alleged clergy sexual abuse because Minnesota lawmakers extended the statute of limitations for such claims by three years, beginning in 2013.

Almost immediately after the bankruptcy filing, the court ordered the archdiocese into mediation with the creditors, primarily victims of sexual abuse, and the archdiocese's many insurance companies.

Church officials and attorneys for creditors hope to see the insurance companies fund a large part of any potential settlement for victims. But whether they do so remains to be seen.

The archdiocese's finances and assets were the subject of Tuesday's hearing, which marks the start of heavy scrutiny of its disclosures.

Creditors asked Mertens about funds, revenue sources and church-held property values. Mertens said about 60 percent of archdiocese revenue comes from assessments of parishes. Last year that amounted to about $15.5 million, he said.

In its initial court filings, the archdiocese reported that it has about $45 million in assets, including $11 million in real estate, and about $15 million in liabilities.

Asked Tuesday what led to the decision to file, Mertens said it was related to the abuse claims.

"I think the filing was (the result of) the number of claims we had against us, which was in excess of 20, and notice of claims served, which numbered about 120," he said.

Existing claims in district courts will be placed on hold and rolled into the bankruptcy proceedings. Any new claims will be filed with the bankruptcy court.