Archdiocese Of St. Paul & Minneapolis Files For Bankruptcy
ST. PAUL, Minn. (AP/WCCO) — The Roman Catholic Archdiocese of St. Paul and Minneapolis filed for bankruptcy protection Friday, saying it is the best way to fairly compensate victims of clergy sexual abuse while allowing the archdiocese to continue the church's mission.
Archbishop John Nienstedt said Chapter 11 reorganization "will allow the finite resources of the archdiocese to be distributed equitably and fairly among victims and survivors ... This is not an attempt to silence victims, nor is it an attempt to deny them their justice in court. On the contrary, we want to respond positively in compensating them for their suffering."
The archdiocese is the 12th U.S. diocese to seek bankruptcy protection in the face of sex abuse claims. Church leaders have said for months that bankruptcy was an option, as the archdiocese faces numerous lawsuits by abuse victims. The lawsuits will be put on hold while bankruptcy is pending.
The filing estimates the archdiocese — the state's largest with more than 800,000 parishioners — has assets between $10 million and $50 million, with liabilities between $50 million and $100 million. It also estimated 200 to 300 creditors.
Nienstedt said the archdiocese has a long journey ahead in working to restore trust, but he does not plan to resign, as some have called for him to do. He said the archdiocese may have to sell assets in the bankruptcy process.
Jeff Anderson, a victims' attorney who is collaborating with the archdiocese on child protection issues as part of an October settlement, said the bankruptcy filing is "necessary." He believes the archdiocese will continue to put victims first, and said the bankruptcy won't stop the ongoing disclosure of information about the abuse cases.
But Patrick Noaker, another victims' attorney, said he's disappointed. Noaker is handling a lawsuit scheduled for trial this month, and he said the filing robs him of the chance to reveal information that could help protect children in the future.
"I don't think it's a coincidence that they filed for bankruptcy about a week before their officials were going to have to take the witness stand and explain themselves on this case," Noaker said. "It stopped it in its tracks so it's just going to prolong the pain for this man."
In August, Jon Jaker became the only person to settle his case with the archdiocese. He calls the bankruptcy filing a cowardly act.
"It is a side step from their responsibility," Jaker said. "I think they should be made to stand in court to answer all of the questions that are difficult to answer and this avoids that."
Minnesota lawmakers created a three-year window in 2013 for victims of past sexual abuse to file claims that otherwise would have been barred by the statute of limitations. Since then, the archdiocese has been sued roughly two dozen times, and it has received more than 100 notices of potential claims.
The mission of the church and its day-to-day operations will continue through bankruptcy, said Charlie Rogers, an attorney working for the archdiocese. Parishes and schools, which are incorporated separately from the archdiocese's central office, should not be affected.
Pamela Foohey, an associate professor at Indiana University's Maurer School of Law, said filing for bankruptcy is a smart move for dioceses in this situation and it can help victims, if they are treated fairly.
The St. Paul-Minneapolis archdiocese will try to avoid prolonged fights seen in other dioceses, Rogers said. The archdiocese has already addressed issues that have bogged down other bankruptcies, including implementing a new system to protect children and disclosing thousands of pages of church documents and the names of accused priests.
The Rev. Charles Lachowitzer, a top church official, said the archdiocese is doing the right thing, and he hopes parishioners see the bankruptcy filing as a necessary step to close "a horrendous and tragic chapter in the life of the church."
Bankruptcy Details For St. Paul-Minneapolis Archdiocese
ST. PAUL, Minn. (AP) — The Archdiocese of St. Paul and Minneapolis filed for bankruptcy protection Friday in what's become a common move for dioceses around the country facing heavy financial pressure from sexual abuse claims. Some questions and answers about the news:
WHY DID THIS HAPPEN?
Minnesota state lawmakers opened a floodgate of new litigation with a legal change in 2013. It opened a three-year window setting aside the statute of limitations on sexual abuse, allowing attorneys to file claims that in some cases were decades old. In addition to some two dozen lawsuits filed since then, attorneys have given notice that more than 100 cases could also be filed. The archdiocese recognized it didn't have enough assets to pay all potential claims and keep operating.
WHAT HAPPENS WITH ALL THOSE LAWSUITS NOW?
All victims' lawsuits, including a few cases that are scheduled for trial later this month, will be halted and they will fold into the Chapter 11 reorganization process. The victims become creditors, and can look to payment from the archdiocese's assets and insurers.
WHAT WILL VICTIMS GET?
Good question. Friday's filing gave only a broad range of church assets (between $10 million and $50 million, with much more in liabilities). Some attorneys say the bankruptcy process can open a path to assets that might have appeared to be off-limits to abuse victims. It's unclear if that will happen in the archdiocese case. Typically, payouts in bankruptcy court come from church assets and insurers. The archdiocese recently sued several of its insurers, asking a federal judge to order that the carriers cover claims and legal fees.
Victims will likely get different amounts, depending on the severity of abuse and harm suffered. It would likely be up to a trustee or creditor's committee to allocate funds.
WHAT'S THE REACTION?
Some attorneys are OK with it. Jeff Anderson, who brought many cases against the archdiocese before an October settlement that put his firm in a collaborative role with the archdiocese in terms of creating a safer environment in the church, said it's necessary and is the best way to put victims first. Mike Finnegan, an attorney in Anderson's firm, says the bankruptcy won't stop them from disclosing priest files and keeping a close eye on the archdiocese.
But Patrick Noaker, an attorney for other abuse victims, was upset that the filing halted upcoming legal proceedings. He said it keeps him from eliciting information in court that could help protect young people in the future.
Church officials say the filing isn't intended to avoid embarrassing revelations. They say if that was their goal they would have filed before thousands of documents were disclosed and high-ranking officials gave depositions in a high-profile case.
HOW ABOUT THOSE IN THE PEWS?
The archdiocese says the filing won't have a material effect on the faithful. Parishes and schools are incorporated separately from the archdiocese's central business office. Attorney Charlie Rogers, who is working for the archdiocese, said the day-to-day church operations should continue, while the bankruptcy proceedings operate in the background.
ANYTHING ELSE?
Yes. Bankruptcy is expensive. The archdiocese has already paid $380,000 to a consultant since it began exploring bankruptcy last summer, and the documents filed Friday show those consultants are in line for hourly rates ranging from $285 to $495 for a legal process that could take quite a while. The archdiocese's attorneys are giving a 10 percent discount, so their hourly rate maxes out at $472.50.
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