The Archdiocese of St. Paul and Minneapolis was back in bankruptcy court Thursday, as U.S. Judge Robert Kressel heard objections to the competing victim settlement plans.
A key issue was whether the plan put forth by attorneys for the clergy abuse victims complied with Chapter 11 bankruptcy law, which allows an organization to reorganize its debt. The victims' plan would tap what attorneys say is $1 billion in archdiocese property and assets not accounted for in the archdiocese's settlement plan.
"Chapter 11 doesn't expect a body to liquidate its assets," Kressel told the court. "It doesn't mean [the archdiocese] is not complying with bankruptcy code."
Kressel also labeled "inflammatory" some of the language used in court documents filed by victims' attorneys when describing the archdiocese's proposed settlement. The archdiocese had filed a motion seeking the removal of the language, which attorneys did.
The hearing was the latest step in the bankruptcy filed in January 2015 in response to the rising number of clergy abuse claims against archdiocesan priests. Earlier this year, the more than 400 abuse victims in the case voted overwhelmingly in favor of a settlement plan put forth by the creditors committee representing them.
The victims' committee plan calls for the archdiocese to boost its own contribution to the victims' fund from the $15 million proposed by the archdiocese to at least $80 million. The committee says the archdiocese has far more assets than it is claiming. The plan also calls for the archdiocese to leverage more money from insurers.
The archdiocese's plan includes a fund of at least $155 million — about $120 million from insurance payments — for the abuse victims who filed claims. It also includes a court order to prevent them from filing future lawsuits against the parishes and insurers involved.
Robert Kugler, representing the victims' committee, told the court that the archdiocese's plan was based on a weak financial foundation.
"While in the process of mediation, the archdiocese went around the creditors and made deals with the insurers," Kugler said. "And the plan is based on that. … We feel as if the filing of this plan is the final act of decades-long effort to deny to survivors what they are entitled to."
Archdiocese attorney Richard Anderson presented 21 objections to the victims' committee's plan. The most significant, he said, was that it would give the bankruptcy court authority to independently value archdiocese assets.
Archdiocese attorneys have argued their plan is the quickest and fairest.
"The archdiocese plan calls for payment of $156 million within a relatively short period of time," said archdiocese bankruptcy attorney Charles Rogers. "The [victims' committee] plan calls for the effective liquidation of the archdiocese with no insurance settlements and ensures years of costly litigation."
At least a dozen insurers and Catholic parishes also filed objections to sections of the settlement plans.
The next hearing date is Aug. 29.
Jean Hopfensperger • 612-673-4511
