In Reorganization plan, archdiocese offers $65 million for abuse victim remuneration

By Maria Wiering
Catholic Spirit
May 26, 2016

http://thecatholicspirit.com/news/local-news/reorganization-plan-archdiocese-offers-65-million-abuse-victim-remuneration/

Archbishop Bernard Hebda speaks to media May 26 following the filling of a plan for Reorganization by the Archdiocese of St. Paul and Minneapolis. Photo by Dave Hrbacek

Sixteen months after entering Reorganization under Chapter 11 of the U.S. Bankruptcy Code, the Archdiocese of St. Paul and Minneapolis filed a plan for Reorganization May 26. The plan identifies more than $65 million in assets the archdiocese anticipates will be available to compensate victims of clergy sexual abuse, with the potential for that amount to grow.

The plan outlines specific sources for funds available for victim remuneration, including at least $8.7 million from the sale of archdiocesan properties, including three chancery buildings on Cathedral Hill, as well as more than $33 million from insurance settlements. It establishes a trust for victim remuneration funds, with a court-approved allocation protocol.

The plan also includes settlements from parish insurers of approximately $13.7 million with the potential for future settlements from archdiocesan insurers that are not currently entering into agreements with the archdiocese. The archdiocese is seeking to transfer the rights of recovery for those policies to the trustee of the trust for victims.

“We filed our plan today — at 16 months — because victims/survivors cannot be compensated until a plan for reorganization is finalized and approved,” Archbishop Bernard Hebda said during a press conference May 26. “The longer the process lasts, more money is spent on attorneys’ fees and bankruptcy expenses, and, in turn, less money is available for victims/survivors. . . . We are submitting our plan now in the hope of compensating victims/survivors and promoting healing sooner rather than later.”

The plan filing came a day after decades-old sexual abuse claims could be filed under the Minnesota Child Victims Act, which the State Legislature passed in 2013. The law lifted for three years the statute of limitations for child sexual abuse civil suits.

The lifting of the statute ushered in a wave of claims against clergy who had been or were serving in the archdiocese, leading the archdiocese to enter bankruptcy in January 2015 as a means to distribute assets equitably and fairly among victims. By a court-established claim deadline in August 2015, more than 400 claims of clergy sexual abuse had been filed against the archdiocese.

In a May 25 statement, the Minnesota bishops apologized for the pain suffered by victims of clergy sex abuse and their families, and thanked them for coming forward.

“While we cannot say or do anything to return the innocence of youth that was stolen, we will work to restore broken relationships with family, friends and loved ones and heal the pain caused to so many,” they said, also promising to continue to work to create safe environments for children, immediately report every allegation, and employ “stringent” hiring practices.

In entering Reorganization, the archdiocese sought to continue the essential ministries and mission of the local Church, leaders said at the time.

The plan does not distribute some assets the archdiocese owns but says are essential for its core mission and cannot be considered salable assets with market value. They include property occupied by the Cathedral of St. Paul in St. Paul, Totino-Grace High School in Fridley, Benilde-St. Margaret’s School in St. Louis Park and DeLaSalle High School in Minneapolis.

The plan also asks for a resolution of 323 lawsuits against 97 parishes in the archdiocese by means of a channeling injunction. It also establishes a counseling fund for victims with an initial $500,000 contribution from the archdiocese, and it incorporates protocols from a civil settlement between the archdiocese and the Ramsey County Attorney designed to ensure the archdiocese is adhering to best practices in child abuse prevention.

For implementation, the archdiocese’s plan requires approval from U.S. Bankruptcy Court Judge Robert Kressel, who is expected to look for agreement from attorneys from the Unsecured Creditors Committee that the plan meets the needs of both victims and the archdiocese.

The plan is “moving us into what we hope is the final phase of the Reorganization proceedings,” said Joseph Kueppers, the archdiocese’s chancellor for civil affairs. “We need to move out of this bankruptcy process so we can move ahead with the mission of the Catholic Church, which is making the name of Jesus Christ known and loved.”

The timeline of the next phase of Reorganization is unknown, Kueppers said, but he expects a May 31 court hearing to provide direction.

Speaking May 26 on the lawn of the archbishop’s Summit Avenue residence, which is among properties the archdiocese has sold and is temporarily leasing, Archbishop Hebda acknowledged that the plan may be modified before it is approved.

“While we believe this plan is fair, we also know that some well-intentioned people may raise objections,” he said. “Reorganizations sometimes involve modifying an initial plan. We are committed to working earnestly with everyone involved to find a fair, just and timely resolution.”

Prior to the plan filing, victims’ attorneys called into question whether the archdiocese was making available all potential sources for victim compensation. In a motion filed with the court May 23, attorney Robert Kugler, who represents sexual abuse victims in the archdiocese’s bankruptcy proceedings, argued that the archdiocese should consider parishes and foundations as fund sources, despite their separate incorporation.

Kugler alleges that in recent decades the archdiocese separated itself from more than $1 billion in assets through the separate incorporation of parishes and the establishment of separate entities for donations, such as the Catholic Community Foundation and the Catholic Finance Corporation.

In a May 24 press conference, Jeff Anderson, a St. Paul attorney representing 378 sexual abuse victims with claims against the archdiocese, said these additional assets could total $1.7 billion.

Speaking May 24 at a separate press conference responding to the accusations, Archbishop Hebda said the archdiocese is carefully reviewing the motion and will count on the court to properly evaluate it.

“Let me be extremely clear: The archdiocese has disclosed all of its assets and followed all of the rules set forth by the court and all directives from the judge,” he said.

At the May 26 press conference, Archbishop Hebda added that he found the accusations “surprising and confusing, particularly since those same lawyers were well aware of all that we have been doing in mediation to maximize the assets available to those who have been harmed.”

He said that he has been advised that confiscating the assets of separately incorporated entities for victim remuneration “is simply contrary to law.”

“In the event that our parishes, Catholic schools and other Catholic groups would wrongly be forced to make their assets available to those who have claims against the archdiocese, there is no question that the impact would be felt in our community by all those who benefit from the ongoing charitable work of parishes, Catholic schools and other Catholic groups throughout the 12 counties that comprise the Archdiocese of St. Paul and Minneapolis,” he said.

“We truly want to do what is right. We have people praying all over the diocese that we might act correctly and take the high road,” he added. “We unfortunately will never be able to undo the harm caused, but we have been striving to compensate those harmed, to help in any way we can with their healing, and to create and maintain safe environments for all children.”