MILWAUKEE – Nearly 25 months into the Chapter 11 bankruptcy reorganization, the Archdiocese of Milwaukee continues to seek an answer to the question it has asked throughout the process: Who is eligible to make a claim?
“How else are you going to satisfy them if you don’t know who has a claim?” Jerry Topczewski, chief of staff for Archbishop Jerome E. Listecki, told your Catholic Herald Jan. 25.
The questions are again being asked as the archdiocese filed a motion Jan. 24 asking U.S. Bankruptcy Court Judge Susan V. Kelley to allow it to suspend payments to attorneys and consultants for the creditors’ committee. The archdiocese would continue to pay its own attorneys with money from its insurance carriers.
The motion was filed because the archdiocese is running out of money. The cost of the Chapter 11 proceedings, in which the archdiocese must pay for its own attorneys and the creditors’ committee attorneys and the services of personnel enlisted by them, has totaled more than $9 million.
“The monies for the Chapter 11 come from accumulated savings and cash reserves; we had money that was budgeted for litigation that we were in before the Chapter 11 petition was filed,” Topczewski said. “We had some investment earnings. Those are the monies we’ve been using to date to pay the bills. Those are gone.”
Exhibits provide numbers
An exhibit filed with the court shows operating cash projections, including professional fee payments from January through June. At the end of January, the cash balance is projected at $626,948. By the end of April it would be -$488,352.
“So now the question is, ‘How can you pay those bills?’ and that’s what John Marek, our chief financial officer, has projected out, that if we don’t get some relief, the answer is we’re not going to be able to pay those bills,” Topczewski said.
If relief is not granted, archdiocesan services would be interrupted. However, if payments to professionals are suspended, the archdiocese, according to another exhibit filed with the court, would have the funds needed to operate. How the attorneys would be paid would be determined in the reorganization plan, according to Topczewski.
“The purpose of reorganization is not to put us out of business it’s to reorganize in a financially viable way to continue operations,” he said. “Reorganization is just that; you find a way to be financially solvent so you can do it.”
Pensions ‘not part of bankruptcy filing’
The concern that the archdiocese would be “out of business” has raised concerns among employees vested in the pension plan overseen by the archdiocese.
Topczewski referred to the archdiocese’s April 1, 2011 statement about the pension plan which said: “The priest and the lay employee pension funds are held in a trust that also holds pension funds from more than 200 other employers. These multi-employer plans are not an asset of the archdiocese and are not part of this bankruptcy filing. All contributions made by the employers – including the Archdiocese of Milwaukee – are irrevocable and may only be used to pay benefits under the applicable plan.”
CSA ‘crucial’
Set to start the weekend of Feb. 8-9, Topczewski termed the Catholic Stewardship Appeal, with a goal of $7.65 million, a “crucial point” in allowing the archdiocese to support local needs, i.e., services for families, programs for parishes, support for schools, and formation for priests and parish leaders.
“People need to know that’s important information – that this is what keeps the operation running, this is what keeps the services and ministries going, this is what funds Catholic Charities, and fund vocations work and funds marriage preparation, and funds our service and support to Catholic schools,” he said. “Those monies are restricted for those purposes so they will not – and cannot – be used for legal fees or other expenses in the bankruptcy.” (Further information about restricted purposes is available at www.catholicappeal.org.)
Church ‘rich in spirit’
That donations to the archdiocese are often “restricted,” i.e., given for a specific purpose, is often overlooked when people talk about the church’s assets, according to Topczewski.
“People think the archdiocese, the church, is rich; well, the church is rich in spirit; the resources of the archdiocese, albeit well managed, are not voluminous,” he said. “We have shown people where the monies we have are, and a lot of the monies we do have are restricted monies that people have given us for specific purposes.”
He said that if someone leaves the archdiocese money in his or her will, and designates that it must be used for Catholic education, then that is how it must be used.
“We can’t take that money and pay for lawyers. It’s against the law,” Topczewski said.
It could be the latter part of February or early March before Kelley rules on the motion as the creditors’ committee attorneys have an opportunity to respond to it, and the archdiocese will be able to answer their response.
