Fiat justitia, et pereat mundus

By Jennifer Haselberger
Canonical Consultation
May 23, 2016

http://canonicalconsultation.com/blog.html

Yesterday, I signed an affidavit in support of substantive consolidation in the bankruptcy case involving the Archdiocese of Saint Paul and Minneapolis. Substantive consolidation is an equitable remedy available to bankruptcy courts whereby the assets of entities closely related to the debtor, in this case the Archdiocese of Saint Paul and Minneapolis, are combined into the bankruptcy estate.

At the heart of a motion for substantive consolidation is the question of equity and fairness. American law does not allow a corporation like the Archdiocese of Saint Paul and Minneapolis to misuse the benefits of the separate corporate forms of, say, parishes or foundations, to unfairly deprive creditors like the victims of sexual abuse by clergy. In other words, the test for whether substantive consolidation is appropriate in a given case is determined by the degree of interrelatedness between the entities to be consolidated and the parent organization.

I was hired as an expert witness in this case, to offer my opinion as to whether the legal standards and factual predicates for substantive consolidation exist. The payment I have received is a $2000 retainer, which is the standard retainer I require for my services.

I support the motion for substantive consolidation in this case for four primary reasons.

1)      The request to consolidate does not include Catholic Charities or Commonbond Communities. This means that those organizations are not impacted by this motion, and they will continue to provide the charitable and compassionate care upon which their much-deserved reputations are based.

2)      The request seeks to make more assets available to compensate the victims of sexual abuse of minors by clergy. Two years ago I proposed a means of promoting reconciliation and reparation for victims, and at that time I noted that organizations like the Catholic Community Foundation were established as a way to insulate funds belonging or donated to the Archdiocese from potential legal judgments and settlements. At that time the website of the Catholic Community Foundation stated that it was founded to support the ‘spiritual, educational and social needs of our Catholic community.’ I asked then, as I ask now, if making reparation towards those who have been harmed in such unspeakable ways by our clergy is not also a spiritual and social need of this Catholic community. I believe we cannot turn a blind eye to the harm and suffering experienced by those individuals, most of whom are or were members of our Catholic community, to preserve advantages for others.

3)      The motion and my affidavit will expose the ways in which the Archdiocese of Saint Paul and Minneapolis has harmed the pastors, assistants, and the lay leadership of the parishes, schools, and affiliated entities within this Archdiocese. This scandal began when the Archdiocese imposed sexually abusive clergy on parishes and their unsuspecting communities, not even offering the courtesy of a warning to parents and others responsible for the well-being of children and other vulnerable people. In addition, those of us who remember the 2010 Strategic Plan and subsequent decisions made regarding the subsidizing of parishes and schools will recall the arbitrary and unfair nature of the decisions that were imposed and then attributed to ‘local decisions’. And, those of you who are parish and school employees or who have been otherwise impacted by recent decisions regarding payroll providers and benefits plans will know that the same type of heavy-handed control continues. This is not only an abuse of the corporate form, but it unjustly, and at times cruelly, impinges upon the autonomy and the consciences of those who have been legitimately entrusted with the spiritual and temporal affairs of our local churches and ministries.

4)      Finally, it is my hope that the request for substantive consolidation creates a path by which we, as the people of this Archdiocese, can finally put this scandal and its fallout behind us. Despite what you may have been told by the Archdiocese or its representatives, the separate incorporation of the parishes is being called into question, meaning the only real way for parishes to get out from under the sexual abuse claims that they are facing is to participate in the bankruptcy process. I know that as a matter of justice, many parishes would gladly contribute the little that they are able to a settlement agreement, but are being prevented from doing so because a few parishes want to avoid having to add their considerable assets to the settlement pot. One might ask if such actions should be understood as mistaking right or wrong for what is good or bad for the institution, and if so doing is not an abdication of our collective responsibility to promote reconciliation and make reparation.

I will provide a link to my affidavit as soon as it becomes available.