Archdiocese Seeks Judge’s Permission to Hire Criminal Defense

By Tom Corrigan
Wall Street Journal
June 17, 2015

http://blogs.wsj.com/bankruptcy/2015/06/17/archdiocese-seeks-judges-permission-to-hire-criminal-defense/

The Roman Catholic Archdiocese of St. Paul and Minneapolis has asked a bankruptcy judge for permission to hire a criminal defense team, after prosecutors in Minnesota filed charges against the archdiocese for allegedly failing to protect children from abusive priests.

In court papers filed Tuesday with the U.S. Bankruptcy Court in St. Paul., Minn., the archdiocese asked Judge Robert Kressel to approve its application to employ two attorneys from Fredrikson & Byron P.A., a Minneapolis-based law firm.

The two attorneys are Joseph T. Dixon and Chelsea Brennan DesAutels, who will charge $400 per hour and $320 per hour respectively. Mr. Dixon’s fee represents a “substantial discount,” according to court papers.

For corporations in bankruptcy, expenses outside the ordinary course of business are typically subject to bankruptcy-court approval because those expenses could eat into limited resources that might one day be used to repay creditors or, in the archdiocese’s case, compensate alleged victims.

The archdiocese, home to 187 parishes and 825,000 parishioners, filed for chapter 11 protection in January in the face of mounting abuse-related lawsuits. The bankruptcy stemmed largely from the passage of the Minnesota Child Victims Act in 2013, which eliminated the statute of limitations for child sexual-abuse cases and opened a three-year window during which alleged victims can file civil lawsuits demanding compensation.

In its court papers, the archdiocese said a criminal conviction could affect its ability to access insurance coverage for abuse-related claims related to events underlying the criminal charges.

The archdiocese also said a criminal conviction could expose it to additional legal liability and “could have serious repercussions on the estate’s finances, which rely on the goodwill and support of parishioners.”

Ford Elsaesser, a lawyer who represented the Diocese of Helena, Mont., during its bankruptcy, said he expects Judge Kressel will approve the employment application even if creditors object to the expense.

“It appears to me that in this case, the bankruptcy court is very concerned with getting an expeditious, global settlement in place,” he said. “In order for that to happen the diocese has to be adequately represented in the criminal proceeding.”

Shortly after filing for bankruptcy, the archdiocese, its insurance carriers and lawyers for alleged victims were ordered to begin mediation in an attempt to reach a broad settlement that will both compensate victims and provide a clear path out of bankruptcy for the archdiocese.

At least 200 alleged sexual-abuse victims have come forward with claims against the archdiocese since it filed for bankruptcy, court papers show. Those numbers could grow larger as more people come forward with allegations of abuse ahead of an Aug. 3 deadline to file claims.

Write to Tom Corrigan at tom.corrigan@wsj.com