Court OKs reorganization planRead Time 6 min

Two sentences spoken by Chief Judge Susan V. Kelley of the U.S. Bankruptcy Court for the Eastern District of Wisconsin on Monday, Nov. 9 – “The motion to confirm the plan is granted. The plan may be confirmed” – concluded a nearly five-year chapter in the Archdiocese of Milwaukee’s history.

The “plan” is the plan of reorganization which extricates the archdiocese from the bankruptcy in which it had been immersed since Jan. 4, 2011.

The hearing drew the largest attendance for any of the proceedings. Twenty-one attorneys representing the archdiocese, the Official

Committee of Unsecured Creditors (the committee), other claimants, the Cemetery Trust, insurance companies and other entities were present, as were Archbishop Jerome E. Listecki, representatives from the archdiocese and more than a dozen abuse victim survivors.

In stating the case number – 11-20059 – to open the hearing, Kelley added, “I know the case number by heart. I’m hoping I never have another case that I memorize the case number on.”

Attorneys for the archdiocese and the claimants, most of whom were represented by the committee, entered mediation, not ordered by the court, July 15-17, and agreed on the plan for reorganization. Mediation attempts in 2012 and 2014 had failed, as did one in fall 2010, which led to the bankruptcy filing.

After Kelley approved the archdiocese’s disclosure statement for the plan of reorganization on Wednesday, Sept. 30, claimants had until Tuesday, Nov. 3, to vote for rejection or acceptance of it. Attorneys for the claimants had encouraged them to accept the plan.
One claimant’s objections

One claimant, known in court documents as P-9, had written his objections for the court and stated them at the Nov. 9 hearing. He contended the archdiocese should not be allowed to determine how claims were classified.

“They don’t have the right to do that; that decision should be yours, not the mediator’s or the archdiocese’s,” he said.

P-9, whose claim was originally in class 10, but moved to class eight in the amended plan, told Kelley, “You should have final distribution, over and above the mediator. The evidence is flawed,” he said. “Victims’ claims should be re-evaluated in class 10 at least.”

When P-9 said, “There was so much cover-up” in investigating claims, Frank LoCoco, an attorney for the archdiocese, responded, “That is not true. It is not right to say we’re still covering up.”

Noting she had already made a decision, Kelley told P-9, “There was due process of law. Some objected to the class they were in. We had that hearing. I did have the last word.”

She said “decisions along the way” helped shape the classifications.

“Those who got money from a settlement – they are not going to get more money,” Kelley said in overruling the objection. “I looked at the fairness of the classifications; I did make the decision that these classifications are reasonable and appropriate according to bankruptcy law.”

Four classes deal specifically with victims

Of the 14 classes of claimants – classes agreed upon in mediation by attorneys for the archdiocese, individual claimants and the committee – four deal specifically with victim survivors.

Class eight is comprised of 355 claimants not parties to a valid settlement agreement releasing the archdiocese from liability associated with the abuse.

Their claims allege abuse of a minor by a priest on the list of substantiated abusers or a member of a religious order or lay person at a Catholic entity.

The amount of their financial compensation will be determined by a court-appointed claims administrator.

The 104 class nine claimants are also not parties to a valid settlement agreement releasing the archdiocese from liability associated with the abuse. Their claims allege sexual abuse of a minor by an archdiocesan priest not on the list of substantiated abusers or a member of a religious order or layperson working at an entity that is not a Catholic entity.

Each class nine claimant, after releasing Catholic entities and settling insurers, will receive $2,000 from the plan trust.

In class 10, there are 121 claimants who have a valid settlement agreement with the archdiocese, or the claim does not allege sexual abuse of a minor, or the claim alleges sexual abuse of a minor by someone other than an archdiocesan priest or a member of a religious order or lay person working at a Catholic entity. They will receive no compensation under the amended plan.

Claimants in classes eight, nine and 10 are “entitled to request therapy payment assistance from the therapy fund” in the plan.

Approximately $250,000 has been set aside for class 11 claimants, defined as “unknown abuse survivor claims.” Criteria for making claims in this class are lengthy, specific and are in effect six years beyond the effective date of the reorganization plan.

‘We will never forget this moment’

Kelley granted a request by LoCoco for Archbishop Listecki to speak. After thanking the judge for her time and for “handling the complexities of this case,” the archbishop continued, “I apologize to the victims and their families for what they endured under clergy who exercised criminal and immoral behavior. There’s no resolution that will ever bring back what victims have lost and what their families have suffered.”

The “courage of the many that have come forward and told their stories” has resulted in “a changing of the consciousness of the archdiocese and dioceses across the nation to pay attention in any way, shape or form to those things that may endanger our children,” Archbishop Listecki said.

Noting that “we have turned a corner in the history of the archdiocese,” and that the church would return its attention to charitable, educational and spiritual works, he continued, “But having said that, we will never forget this moment. It has and continues to shape us as we continue on into the future.”

Later, when interviewed by the Catholic Herald, the archbishop reiterated his apologies to the victims and their families, and said, “There’s never an amount of money that’s going to bring healing to them because of the type of situation, because of the abuse they suffered. You can never regain what was lost; nothing is going to make them whole.”

Asked if approval of the plan provided closure, the archbishop said, “When we talk in terms of closure, it’s never really closure because you always have this before you. Sometimes you hear, ‘Oh, closure; that means you’re forgetting it.’

“No, we’re different, and the reason why we’re attentive to certain things, the reason why we do certain things, the reason why we get hyper about certain things is not because of bankruptcy, but because of sexual abuse which raises the consciousness in such a way that you would just never think of doing things today the way you did them 30 years ago,” he said, adding, “Under my watch, and I’m sure under any other bishop’s watch, we are never going back to those times.”

Victims speak

At various times throughout the one hour and 46 minute hearing, Kelley invited victim survivors to speak.

Kevin Schultz said that he, his brother and two sisters were all abused by the same priest.

“It caused a riff in our family. We didn’t talk about it until 2005,” he said. “In 2005, the archdiocese provided me with help. I’m better now but I’m still dealing with it on a daily basis. I’ve gone through a divorce, and my daughter doesn’t speak to me. I can’t set a foot in church, but I would like to get closer to God.”

He said he asks God why the abuse happened.

“It shouldn’t have happened to us. It should have been stopped. They moved him from parish to parish. We were left helpless,” he said, his voice rising. “The church should not ever come out of bankruptcy. They are not the church that Jesus started.”

A victim of Fr. Lawrence Murphy, who headed St. John School for the Deaf from 1963-1974, asked Kelley, “Why is Fr. Murphy being more protected than the victim?

She replied, “I’m not sure there is a legal answer to that. Fr. Murphy is deceased. Victims will receive therapy assistance and will receive payment from the plan. I’m not sure how he’s protected. He’s dead. He did vile things. Nobody doubts this; to the extent anybody ever did doubt it, they can stop doubting. He did vile, horrible things, but he’s dead.”

In her closing remarks, Kelley said, “Hopefully, as the archbishop said, a page can be turned, some resolution can be had, and with therapy and provisions provided, there can be some peace for the survivors.”