ST. FRANCIS – An Oct. 22 decision by U.S. District Judge Rudolph T. Randa might signal progress in the Archdiocese of Milwaukee’s Chapter 11 proceedings.
Randa affirmed the bankruptcy court’s ruling that since Claimant A-282 had settled his sexual abuse claims against the archdiocese for $80,000 after participating in the archdiocese’s voluntary mediation program, he could not “undo that settlement so he can extract more money from the archdiocese for being abused by Fr. (Lawrence) Murphy.”
According to Jerry Topczewski, Archbishop Jerome E. Listecki’s chief of staff, approximately 200 abuse victims “received a settlement and reached resolution” through the archdiocesan mediation process, which began in January 2004.
“We voluntarily started the independent mediation system as a way to reach out to people, for them to seek resolution with the church, if they so desired, including the financial component, and we’ve always said the way the system was designed, it was independent, it was designed by the Marquette University Center for Dispute Resolution, and that it was a fair and just way to do this, including the people who participated and helped in the design,” Topczewski said.
He noted that the from the beginning of the bankruptcy proceedings on Jan. 4, 2011, the archdiocese filed objections to claims by those with whom it had reached a mediated settlement because it didn’t feel they should be eligible for another payment.
“It doesn’t seem fair that you try to receive additional monies when there’s a limited amount of resources, especially when there is someone who hasn’t received anything,” Topczewski said.
If the Randa decision regarding A-282’s claim sets a judicial precedent, it could mean approximately another 90 claims, filed by those that had a previous settlement with the archdiocese, could be ineligible. Claims filed in the bankruptcy total approximately 570.
“It is one case, one claim, but it has impact in precedent in other claims of a similar nature,” Topczewski said. “Anytime we can get some clarity on what claims are eligible, it helps us in developing the plan so we know which claims will be addressed in the plan of reorganization and how they might be handled so they can be satisfied.”
While encouraged by the Randa ruling, eligibility of claims remains a “stumbling block” in the proceedings, according to Topczewski.
“In bankruptcy, how it usually works is you say who’s got eligible claims and what are the resources available to pay those. You work from that. This has been a little different because there’s been a more contentious conversation around which claims are eligible,” he said.
In addition to claims made by those with whom it has settled, the archdiocese is also objecting to claims made by people abused by someone who was not under the governance of the archdiocese, e.g., lay person employed at a parish, a religious order priest. It is also objecting to claims on which the statute of limitations had expired.
At some point in the proceedings, the archdiocese will need to file a plan for reorganization with the bankruptcy court.
“The best way to get it (reorganization plan) approved by the court is that it is a consensual plan, meaning the creditors’ committee, along with the archdiocese, say this is a good plan,” he said. “We’re not sure if we’ll get to a consensual plan because the demands of the creditors’ attorneys are high and we don’t have the resources. The more we spend on litigation, the more the costs of the bankruptcy get eaten up by attorneys.”
Topczewski said even though the archdiocese received permission from the court to stop paying attorneys’ fees, they continue to accrue.
“The rules of bankruptcy say that when a plan is confirmed, one of the elements of the plan is the attorneys’ or professional fees have to be paid in full, in cash. So the attorneys get paid regardless,” he said, noting that those fees are “over $4 million.” The archdiocese is responsible for the fees of its attorneys, as well as those of the creditors’ committee.
Asked how much longer it would be until resolution is reached, Topczewski would not predict.
“One day at a time; patience and prayer,” he said. “The archbishop has been real good about reminding us that those are the two things he’s stressed – patience and prayer – because it’s a long process, and it’s a process that has its ups and downs, starts and stops, but you have to be patient when you work with the legal system because it’s a complicated process.”