The Archdiocese of Milwaukee filed its disclosure statement for the Plan for Reorganization under Chapter 11, tinyurl.com/archplan2014, with the U.S. Bankruptcy Court Eastern District of Wisconsin on Feb. 12. One legal observer, speaking on condition of anonymity, termed it the “most complete disclosure statement ever filed” in a diocesan bankruptcy proceeding.
People tell archbishop: ‘It’s time for healing’
The bottom of Page 125 of the Plan of Reorganization filed in the Archdiocese of Milwaukee’s Chapter 11 bankruptcy proceedings has a place for Archbishop Jerome E. Listecki’s signature. When he signed it, he did so with a twofold intention.
Brian T. Olszewski
Besides detailing how the archdiocese would settle claims of creditors, including approximately 128 victim survivors of sexual abuse, and continue the work of the church in southeastern Wisconsin, the 337-page document provides a close look at costs involved in the more than three years since the filing took place, the archdiocese has dealt with clergy who have sexually abused minors, how it has ministered to victim survivors of that abuse, and who would receive compensation.
Costly pursuit of assets
by plaintiffs’ attorneys
In the overview of the plan, the archdiocese notes it had offered $4.6 million to settle 23 claims, but that the plaintiffs, represented by Jeff Anderson & Associates, P.A., compensated based upon a percentage of what recovery their clients receive, rejected the offer in November 2010. The archdiocese also offered it at the beginning of the Chapter 11 proceedings, but it was rejected by the Official Committee of Unsecured Creditors (the committee), comprised of five individuals represented by the Anderson firm.
Regarding the committee’s choice of legal counsel, the plan states, “The debtor has made allegations throughout the Chapter 11 case that the committee and its counsel, Pachulski Stang Ziehl & Jones LLP, have been improperly representing the abuse survivors to the exclusion of other unsecured creditors. No action has yet been taken on these allegations during the Chapter 11 case.” The list of creditors includes the Catholic Herald, with a claim of $1,245 for advertising sold and graphic design.
The committee opted to “demand that assets belonging to others such as parish property, parish deposit funds, and trust funds established for other charitable purposes be added to the Chapter 11 assets and distributed to abuse survivor claimants,” according to the plan.
The court eventually ruled that none of the committee’s allegations were correct, but the committee’s pursuit of those assets cost the archdiocese, which is responsible for its own fees as well as those of the plaintiffs, more than $3.8 million and represent more than 32 percent of all legal fees in Chapter 11.
“…all the money originally available to creditors has been spent along with substantial additional monies that must be paid as required by applicable bankruptcy law,” the plan notes.
Historical view of response to clergy sexual abuse
Six pages of the plan are devoted to how the archdiocese responded to the clergy sexual abuse. Among its response initiatives were:
1989: Established Project Benjamin, an initiative that brought together abuse survivor advocates, healthcare professionals, judicial and law enforcement representatives and clinical social workers and therapists to assist in the archdiocese’s response to abuse survivors.
1994: Implemented a Code of Ethical Standards for church Leaders for those engaged in church ministry. It is in its eighth edition.
2002: Establishment of the Eisenberg Commission — an independent panel of experts that reviewed cases and made recommendations about priests who had been permitted to exercise ministry after past sexual abuse had been alleged or discovered. This step was only taken after extensive therapeutic interventions and with assurances from psychological experts. The panel reviewed cases and made recommendations as to whether the priest should continue in ministry.
2002: Implementation of the Charter for the Protection of Children and Young Adults, adopted by the U.S. bishops that June. The archdiocese also took a number of other steps, among which, but not limited to, were the hiring of a victim assistance coordinator and a safe environment coordinator; and establishment of a Community Advisory Board and a Diocesan Review Board.
2004: Established an independent, voluntary mediation system that led to the voluntary settlement of 192 claims in the amount of $33 million. On July 9, publicly listed all diocesan priests restricted from ministry in accordance with the Charter on its website.
2013: Published historical records, timelines principally prepared by counsel for the abuse survivors, narratives, depositions and deposition exhibits regarding 42 of the 45 priests who have been publicly listed on the archdiocesan website since 2004 for having had at least one substantiated act of sexual abuse of a minor.
In regards to the archdiocese’s commitment to protect children from sexual abuse, the document states, “Only seven claims allege sexual abuse after 1990, six of which occurred in the 1990s, and the last which allegedly occurred in 2003. Thus, nearly 99 percent of the sexual abuse that has been alleged in the claims occurred more than 20 years ago and some of that abuse occurred much longer ago than that.”
Who gets what?
In the Q&A posted on tinyurl.com/reorgplan, the archdiocese explains: “The bankruptcy judge has recognized the different categories of claimants and the plan follows the categorization of claims recognized in court proceedings. Making distinctions between the various situations represented by different claimants is necessary to settle all the claims. The archdiocese has maintained all along that none of the claims is legally allowable because of the statute of limitations.”
Archbishop Jerome E. Listecki has insisted from the beginning of Chapter 11 proceedings that any reorganization plan had to include a $500,000 therapy fund, to which money will be added annually if there is ever a shortfall. Under the reorganization plan, abuse survivors, with the exception of those whose pre-petition settlements specifically provided for cash in lieu of ongoing therapy assistance and those who claims have been disallowed, the archdiocese will make therapy assistance available to “nearly all abuse survivor claimants that report sexual abuse by a priest.”
Among the classifications are those who have pre-petition settlement claims with the archdiocese. Approximately 84 claimants have or will receive the balance of what they are owed on their pre-bankruptcy settlements, which total approximately $702,000.
The aforementioned 128 claimants, listed in the plan as Archdiocesan Abuse Survivor Claims Subject to Statute of Limitations Defenses, “shall receive, in full satisfaction, settlement, and release of his or her Claim, a claim against the Insurance Litigation Trust for a Pro Rata distribution on such claim from the Insurance Litigation Trust in accordance with the terms agreed to by holders of Class 9 Claims…” The amount of money in that trust is determined by what is recovered from insurance companies.
The approximately 165 abuse survivors with claims that have “no factual basis for fraud” will receive care through the therapy fund, as will the 48 abuse survivors with claims that allege “abuse solely by a lay person.”
The next step will be for the judge to hold a hearing April 17 on the adequacy of the disclosure statement, and then determine whether it contains adequate information that would help a creditor vote for or against the plan. If she deems it adequate, the disclosure statement, along with a ballot, will be sent to each claimant.