Disclosure statement, reorganization plan offer look at archdiocese’s futureRead Time 5 min

St. Francis — Answers to how the Archdiocese of Milwaukee will compensate victims of clergy sexual abuse while extricating itself from the throes of bankruptcy that have gripped it for nearly five years are found in the 399-page disclosure statement and plan for reorganization it filed with the U.S. Bankruptcy Court for the Eastern District of Wisconsin, Monday. Aug. 24.

The final answer, however, will come the week of Nov. 9, when that court’s chief judge, Susan V. Kelley, decides to approve

the plan or not. Between now and then, there will be a hearing on the “adequacy of the information in this disclosure statement” – a document that provides background and historical information pertinent to the archdiocese and Chapter 11 – and a vote by those having claims against the archdiocese.

In the statement, the archdiocese states the amended plan of reorganization proposes “a global settlement, resolving all of the pending litigation and distributing the remaining assets as equitably as possible.”
Settlement vs. further litigation

The amended plan provides $21,250,000 in settlement proceeds, including $10,705,798 from settlements with nine insurance companies, to certain abuse survivors, and the establishment of a $500,000 therapy fund.

“The alternative is years of litigation where none of the parties reach closure and the archdiocese’s assets are further reduced,” the archdiocese wrote.

That alternative, according to the archdiocese’s estimate, would extend litigation for another three to five years, and would cost $33.25 million in additional fees to resolve the outstanding issues in the case if the insurance companies and state court counsel – attorneys for individuals with claims who are not represented by the Official Committee of Unsecured Creditors (the committee) – require trials on each abuse survivor claim.

That litigation would also result in “forfeiting all settlement proceeds of the several settlements incorporated into the amended plan,” according to the disclosure statement.

Claimants and compensation

Of the 14 classes of claimants – classes that were 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 336 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 either a priest on the list of substantiated abusers, tinyurl.com/clergyoffenders, 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 119 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 either 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 124 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,” according to the disclosure statement.

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.  

Continuing its mission

In the disclosure statement, the archdiocese notes that had it not filed for Chapter 11 on Jan. 4, 2011, “it would likely have resulted in a cessation of the archdiocese’s ministry, education, and charitable outreach, upon which so many people rely.”
Among the reasons it listed for filing:

• continue its outreach and support to abuse survivors as an ongoing ministry of the church;
• continue essential ministries and services of the archdiocese in order to meet the needs of the parishes, parishioners, and others who rely on the church for spiritual, pastoral and human assistance, i.e., a continuation of its mission;
• provide compensation for the unresolved claims of abuse survivors including those who had not yet come forward; and
• fairly allocate the archdiocese’s remaining income and assets among the legitimate competing interests for such property, recognizing that it is not possible to pay all alleged claims and interests in full.

  The archdiocese lists in the disclosure statement how it will fund the reorganization plan. Among them are:

• proceeds of the modified Cousins Center sublease with the Milwaukee Bucks;
• loan renewal from Park Bank;
• quarterly distributions of approximately $487,000 from the Archdiocese of Milwaukee Cemetery Perpetual Care Trust (Cemetery Trust);
• continuation of parish assessments;
• continuation of the Catholic Stewardship Appeal;
• income from cemeteries;
• miscellaneous donations, bequests, fees for services, rent and grants.

The archdiocese noted its approximately $25 million annual budget is funded primarily by three sources: Approximately $7.2 to $7.4 million through the annual Catholic Stewardship Appeal; cemetery sales, i.e., lots, crypts, niches, burial services, markers, etc., totaling nearly $4.5 million; and $1.95 million from the Cemetery Trust to help defray the cost of providing perpetual care to the cemeteries.

Assessments on parishes and schools account for approximately $7 million, with remaining funds coming from miscellaneous sources including grants, fees for services, donations, bequests and rents.

Request for confirmation

While claimants, through their attorneys, may object to the disclosure statement on Wednesday, Sept. 30, and to the plan itself on Nov. 9, the archdiocese is asking the court to confirm the plan as a “cramdown amended plan.”

A term associated with U.S. Bankruptcy Code Section 1129, cramdown allows the court to confirm a plan of reorganization even if a class or classes of claimants reject it, so long as the plan does not unfairly discriminate and as long as it is fair and equitable.

Jerry Topczewski, chief of staff for Archbishop Jerome E. Listecki, told the Catholic Herald that critics of the amended plan need to realize how it came to be.

“This was a mutual agreement reached through mediation and which allows both abuse survivors and the archdiocese to begin moving forward, putting this sad chapter of the church’s history behind us, never forgetting the harm that was done,” he said. “With this resolution we’re trying to move forward and focus on the spiritual, charitable, and educational mission of the church.”