ST. PAUL -- A federal bankruptcy judge has approved a request by local parishes to officially participate in Chapter 11 proceedings for the Archdiocese of St. Paul and Minneapolis.
There are 187 parishes in the archdiocese, which covers a 12-county area, with about 825,000 parishioners.
The parishes had been invited to participate in mediation but will now be represented by an official parish committee, made up of representatives selected by the U.S. Trustee’s Office. The appointment process will parallel that of the creditors committee, created to represent unsecured creditors - primarily, in this case, victims of clergy sexual abuse.
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Attorney Mary Jo Jensen-Carter of the White Bear Lake firm Buckley & Jensen represents more than 100 parishes, which operate as entities separate from the archdiocese. She said the intent is to protect the parishes’ financial interests, because many have financial ties to the archdiocese, and to address the claims of abuse victims.
Local parishes are creditors in the bankruptcy case. Parishes’ financial ties include contributions to the Inter-Parish Loan Fund, “other ordinary-course-of-business financial transactions” and paying insurance premiums to the archdiocese’s general insurance fund and medical and dental benefit plan, according to court documents. Those insurance funds reportedly contain about $17.5 million in excess funds, of which up to 95 percent ($16.6 million) came from overpayments by parishes and unspecified “other entities,” according to Jensen-Carter’s motion to approve the parish committee.
The parishes are also likely to have indemnification claims against the archdiocese for clergy sexual abuse cases, Jensen-Carter argued. Although parishes pay priests’ salaries and benefits, “the archdiocese has the sole authority to assign its priests to the parishes,” the motion said. And because many parishes have received notices of claim - the precursor to a lawsuit for sexual abuse - they would, in turn, file claims against the archdiocese for its role if lawsuits were filed against individual parishes.
So, instead of dealing with victims’ claims against the archdiocese and parishes separately, the parishes urged the court to let them participate in the proceedings to more efficiently identify insurance coverage available for potential settlements.
U.S. Bankruptcy Judge Robert Kressel granted the parishes’ request for a committee Thursday.
Jensen-Carter said the committee members likely will be selected within a week or so.
“This parish committee and the parishes are committed to getting just compensation to these victims and to get this issue resolved as swiftly and fairly and as economically efficient as we can do it,” Jensen-Carter said Friday.
The archdiocese filed for bankruptcy protection in January, citing an operating deficit and concerns about more lawsuits for clergy sexual abuse.
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Pending lawsuits were put on hold, and all claims became part of the bankruptcy proceedings.
Victims of clergy sexual abuse who wish to file claims with the court have until Aug. 3 to do so.
The archdiocese has until Nov. 30 to file its Chapter 11 reorganization plan.
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