In a filled U.S. Bankruptcy Court Eastern District of Wisconsin courtroom for a hearing on the approval of the Archdiocese of Milwaukee’s disclosure statement for reorganization on Holy Thursday, April 17, Judge Susan V. Kelley began by clarifying on the record that the hearing was for approval of the archdiocese’s disclosure statement, not to approve the plan of reorganization filed Feb. 12.
Kelley said if attendance was any indication – people filled the benches and extra chairs lined up against the wall, with several standing near the door – people received the notice of the hearing and were interested in seeing if the disclosure statement would be approved.
She said it was important for everyone in the courtroom to know that the hearing was not for approval of the plan, noting that she had received objections from abuse survivors who objected to the plan and stated provisions of the plan weren’t fair and didn’t treat them the way they wanted to be treated.
“These objections aren’t for consideration today,” Kelley said. “Today we’re here to talk about the disclosure statement which must be done before the plan can be sent out for voting by the creditors.”
The disclosure statement details how the archdiocese would settle creditors’ claims, including approximately 128 victim survivors of sexual abuse, and continue the work of the Catholic Church in southeastern Wisconsin.
Kelley explained they will have a chance to object to it, if the disclosure statement is approved and then sent out with the plan.
If the reorganization plan, as proposed, is not confirmable as a matter of law, there’s authority that says the court should not approve the disclosure statement because it would be a waste of time and resources, Kelley said.
Kelley said that the archdiocese had “several million reasons” why it doesn’t want to delay this process any more, because it’s out of money and settling now is the only way to finish the case and still provide something for the victims.
She also said she’s sensitive to trying to finish the case and that if the plan can’t be confirmed, it should be dismissed. She said she realizes there are a lot of problems with it, but they need to get to that point and deal with this issue as part of that process.
“So, we would move to then the approval of the disclosure statement,” she said, explaining that she went through the 150-page disclosure statement page by page deciding what should or shouldn’t be included, regarding the debtors’ and committees’ comments.
Kelley went through it page by page with the attorneys, who followed along on the monitors at their desks, showing them what parts were appropriate to remain in the document, what needed to be added and what would be deleted. She said some of the language needed tightening, while she removed some that she thought “went too far.”
She also asked that the archdiocese add an explanation clearly, “up front” and “in English, not legal terms,” regarding why, after Archbishop Jerome E. Listecki made public statements inviting abuse survivors to file claims and said the archdiocese wanted to do as much as it could to treat abuse survivors fairly, the archdiocese then objected to those claims.
“I think if you have a response as to why this was said this way, but yet you took the strategy you did, explain it in English so the people can see,” Kelley said.
In an interview with the Catholic Herald on Monday, April 21, the archbishop said he had invited those who had been abused by diocesan priests to file claims.
“In bankruptcy, you open it up to everyone who may have a claim against the archdiocese,” he said. “At some time there’s a separation of those that are our responsibility and those that aren’t our responsibility.”
Judge Kelley also asked that the archdiocese explain why all of the abuse survivor claims aren’t put into one class and then a committee of abuse survivors allowed to decide how the funds for that class should be divvied up, as is happening in other dioceses’ cases.
“It’s not being proposed here … I want it explained here,” Kelley said.
Asked about that during the interview with the Catholic Herald, Archbishop Listecki said, “Not all of the claims are similar. The classifications help us understand which claims, basically, are ours and should have merit over others.”
Kelley asked, as stated in the Appearances and Summary of Hearing, for an explanation of why the Cemetery Trust loan is in the amount of $2 million rather than a larger amount.
“The court also considered specific objections filed by various insurance companies and directed the debtor to make certain changes in response to those objections,” according to that summary.
Asked about the $2 million amount, Archbishop Listecki explained, “We’re putting ourselves on the line for the loan; we’re on the hook for it. One of the aspects of coming out of bankruptcy is that you are able to continue to do the work you need to do, and to do it in such a manner that you can do it prudently and judiciously.”
The archbishop added that the amount of the loan had to be worked “into the whole aspect of completing our mission,” while at the same time being an amount that the archdiocese would be able to repay.
When emotions heated up the courtroom Kelley quickly diffused the situation by reminding everyone the case is hard enough without “mudslinging.” She said if the name-calling and comments didn’t stop, she would stop the hearing and everyone would have to come back another day.
After about two hours of discussion, Kelley announced the court would reconvene after a 30-minute recess to continue working through the disclosure statement to get it to the point where, with some corrections, it could be sent out to the creditors and the abuse survivors and a schedule could be set for getting the plan out for voting.
The summary stated that, in a few instances, final language changes were not decided at the hearing and that the archdiocese, creditors’ committee and insurers would draft changes and share those proposed changes with each other by May 1.
The archdiocese will provide a red-line copy of the proposed final disclosure statement to the court indicating any language changes that all parties couldn’t agree upon by May 9, and the court would rule upon the disputed items without a hearing, it said.
“The court will advise the parties of its rulings by May 15, 2014, so that the final version of the disclosure statement will be ready for approval on that date,” according to the summary.
On Tuesday, April 22, the court held a telephone scheduling conference with attorneys representing the creditors’ committee, the archdiocese and insurance companies to discuss a schedule for the hearing on confirmation of the reorganization plan. Attorneys for the archdiocese had proposed a schedule in which the confirmation hearing for the plan would have been held during the last week of August. However, due to scheduling conflicts with the court and among other attorneys, the confirmation hearing is scheduled to begin Tuesday, Oct. 14.
