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Twin Cities Archdiocese Bankruptcy Plan Rejected

Posted on in Arlington Heights Bankruptcy Lawyer

Twin Cities Archdiocese Bankruptcy Plan Rejected

In late December 2017, federal bankruptcy judge Robert Kressel rejected the settlement plan put forth by the Archdiocese of Minneapolis & St. Paul. The Archdiocese of Minneapolis & St. Paul originally filed for bankruptcy in 2015 as it faced allegations of sexual abuse. In rejecting the plan, the judge required the archdiocese to renegotiate its settlement plan to include all parties entitled to recover compensation from the settlement. The original plan put forth was for the archdiocese to create a fund, primarily funded by insurance payments, to compensate the sexual abuse victims who filed claims against it. This fund was initially set to be $115 million, but a counter from the survivors committee is calling for the archdiocese to increase this fund by at least $80 million.

A bankruptcy case has many moving parts, and each case is unique. The bankruptcy case of the Archdiocese of Minneapolis & St. Paul is somewhat unique in that it involves a church, rather than a for-profit company, seeking relief and that it is facing allegations of sexual abuse from former parishioners.

Why the Plan was Rejected

The judge who rejected the settlement plan stated that the perpetrators of the sexual abuse that occurred were not held accountable with the initial version of the settlement. He called for a revised settlement plan to give all parties involved in the case a voice in its proceeding. Ideally, any new plan that comes out of this round of negotiations will allow for a speedy resolution of the case, which means the abuse victims can be compensated for their damages and expenses sooner.

Pushback from Abuse Victims

Abuse victims have many financial concerns of their own, such as their attorney fees for their roles in the negotiations and any sexual abuse claims they filed against the archdiocese at earlier times. According to one of the attorneys involved, these legal fees could be between $30 and $40 million.

Kressel cited the abuse victims' rejection of the archdiocese's plan as one of his motivations for rejecting it himself. In May 2017, the committee of abuse victims voted in favor of the archdiocese's creditors' committee's settlement plan. However, the judge chose to reject the creditors' plan, as well, because he felt it hinged too much on future litigation success to properly compensate the archdiocese's creditors and fund the survivors' compensation fund. He also rejected a plan to include individual parishes within the archdiocese and their assets in the bankruptcy plan, which the survivors' committee voted to consolidate to free up money to add to their compensation fund.

Work with an Experienced Arlington Heights Bankruptcy Lawyer

Bankruptcy is a complicated process, and as you can see from the case discussed above, there are many reasons why the court may reject a bankruptcy petition. Contact our team of experienced bankruptcy lawyers at Newland & Newland, LLP today to set up your initial consultation in our office to discuss your case in further detail. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Daniel Mccullough)

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