St. Paul Archdiocese Bankruptcy Plan: at Least $65m to Creditors

Pioneer Press
May 25, 2016

http://www.twincities.com/2016/05/26/st-paul-archdiocese-minneapolis-bankruptcy-reorganization-plan/

The Archdiocese of St. Paul and Minneapolis on Thursday filed a bankruptcy reorganization plan that would set up a trust fund of more than $65 million to compensate some 440 clergy abuse victims plus other creditors, with just over half of that amount coming from insurance.

The plan would also create a $500,000 fund to pay for counseling and incorporate the terms of a settlement reached with Ramsey County in December that allows for greater legal oversight of the archdiocese over the next three years, with the goal of changing its organizational culture to ensure that no more children are abused.

Archbishop Bernard Hebda said in a statement that he believes the plan is fair but knows that some people may object and that the plan may need to be modified. He said his ultimate goal “is to work earnestly with everyone involved to find a fair, just and timely resolution.”

But attorney Jeff Anderson, whose St. Paul firm has filed most of the abuse claims against the archdiocese since Minnesota gave survivors of past abuse a new three-year opening to sue, called the plan “predictably deficient.” He said the archdiocese is offering only 1 percent of what it’s capable of paying.

“What this archdiocese is doing is betraying the pledges that they’ve made to be transparent and to be accountable,” Anderson said. “These survivors were betrayed by predatory priests for decades. The officials concealed that and betrayed the survivors again. And now by proposing and trying to coerce this plan upon them, it’s a further betrayal.”

Anderson reiterated a claim he and a creditors committee made earlier this week that the archdiocese has $1.7 billion worth of assets it could use to compensate victims — a contention that the archdiocese disputed — and he repeated his accusation that the archdiocese is sheltering assets to avoid big payouts. Among other things, he faulted the archdiocese for listing the Cathedral of St. Paul and three Catholic high schools as having no value.

The archdiocese has reached settlements with Home Insurance, State Farm and Catholic Mutual Insurance totaling $33.2 million, according to the filings, but other insurers are still unwilling to pay. Any money recovered from them would raise the amount available for victims. The archdiocese would contribute $13 million in cash to the trust fund, including money from the sale of church properties, while parishes, schools and other Catholic organizations would pay $14.7 million, primarily from insurance.

The archdiocese statement said that the filing is an important step in the process because abuse victims can’t be compensated until the bankruptcy court approves a reorganization plan. The court has already approved more than $5.4 million in professional fees and expenses, but there were still unpaid bills estimated at $4.1 million, according to the filings.

“The longer the process lasts, more money is spent on attorneys’ fees and bankruptcy expenses; and, in turn, less money is available for claimants,” the archdiocese said.