Twin Cities Archdiocese Asks Bankruptcy Court to Approve Its Plan Despite Victims’ Objections

by San Antonio Attorney

The Archdiocese of St. Paul and Minneapolis recently released a reorganization plan after filing for bankruptcy.  The reorganization plan, released on Thursday, allots a budget of $65 million that serves as compensation for sexual abuse victims by the clergy.

This plan was approved by the bankruptcy court in Minneapolis after several sessions of negotiation with the victim’s attorneys and the insurance companies of archdiocese.  Problems were encountered as both parties did not arrive at a mutual agreement.

Cramdown, a bankruptcy jargon, was applied by the archdiocese as they requested the bankruptcy judge to approve their reorganization plan despite victims’ objections.

Cramdown is officially defined as a process wherein a judge has the decision to force the reluctant creditor to accept a reasonable Chapter 11 reorganization plan.

The victims revealed that the proposed contribution amounting to $13.1 million is only a small portion of the archdiocese’s total assets.

Jeff Anderson, a lawyer specializing in these cases, has represented almost 450 victims.  Anderson said that the bankruptcy plan devised by the archdiocese is ‘shallow.’

The plan consists of funds that come from settlements with the insurers of the archdiocese.  Parishes’ insurance companies also contribute to approximately $13.7 million of its funds.  In addition, the auction of the archbishop’s residence and other real estate properties sum up to a total of $8.7 million.

The victims are given the opportunity to file a case against the insurance companies of the archdiocese.  This will serve to improve the financial status of the archdiocese.  The plan consists of provisions that provide protection for parishes against abuse-related lawsuits from the past.  In return, forgiveness of debts will happen as well.

According to the court papers, the archdiocese provides more financial compensation as compared to other diocesan bankruptcies.  But this is not accounted to the number of victims involved in these cases.

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