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Half of New Orleans clergy abuse claims could be tossed in US bankruptcy court Half of New Orleans clergy abuse claims could be tossed in US bankruptcy court
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Outcome could have major effects on whether the Catholic archdiocese settles its expensive, five-year-old caseOutcome could have major effects on whether the Catholic archdiocese settles its expensive, five-year-old case
As New Orleans’s bankrupt Roman Catholic archdiocese finalizes a plan to settle 633 clergy abuse claims filed against it, the church’s investors are arguing in US bankruptcy court that about half of those survivors could have their claims thrown out.As New Orleans’s bankrupt Roman Catholic archdiocese finalizes a plan to settle 633 clergy abuse claims filed against it, the church’s investors are arguing in US bankruptcy court that about half of those survivors could have their claims thrown out.
Church officials said on Wednesday they would not necessarily seek that, though the eligibility of claims will be determined by a court-appointed examiner. If the investors’ arguments prevail, it could have major effects on whether the US’s second-oldest Catholic archdiocese settles its expensive, five-year-old bankruptcy case – or if victims of abuse by its clergy will pursue their claims individually in civil court.Church officials said on Wednesday they would not necessarily seek that, though the eligibility of claims will be determined by a court-appointed examiner. If the investors’ arguments prevail, it could have major effects on whether the US’s second-oldest Catholic archdiocese settles its expensive, five-year-old bankruptcy case – or if victims of abuse by its clergy will pursue their claims individually in civil court.
Meanwhile, documents filed in court on Tuesday outlined how the church has agreed to pay at least $180m into a settlement trust, with the total growing to between $210m and $235m if a number of affordable apartment complexes owned by a church affiliate can be sold.Meanwhile, documents filed in court on Tuesday outlined how the church has agreed to pay at least $180m into a settlement trust, with the total growing to between $210m and $235m if a number of affordable apartment complexes owned by a church affiliate can be sold.
After the eligible claimants are determined, they will get to vote to approve or reject the settlement by 29 October.After the eligible claimants are determined, they will get to vote to approve or reject the settlement by 29 October.
If two-thirds of the voting claimants do not approve the settlement, Judge Meredith Grabill has said she will have no choice but to throw the church out of bankruptcy.If two-thirds of the voting claimants do not approve the settlement, Judge Meredith Grabill has said she will have no choice but to throw the church out of bankruptcy.
Attorneys representing a bloc of about 180 claimants are already urging their clients to vote “no”.Attorneys representing a bloc of about 180 claimants are already urging their clients to vote “no”.
That group alone would not be large enough to derail the settlement if there are more than 600 claimants voting on it. But it would be easily large enough to kill the deal if claims questioned by the church’s bondholders are thrown out.That group alone would not be large enough to derail the settlement if there are more than 600 claimants voting on it. But it would be easily large enough to kill the deal if claims questioned by the church’s bondholders are thrown out.
The archdiocese has previously noted that 154 claims were filed after a March 2021 deadline set by the bankruptcy court. But it has not asked to have those claims thrown out.The archdiocese has previously noted that 154 claims were filed after a March 2021 deadline set by the bankruptcy court. But it has not asked to have those claims thrown out.
The church also argued in court filings that 142 more claims turned out to be duplicates, named abusers who were part of religious orders or other groups not under the archdiocese’s authority or came from victims who were already paid individual settlements.The church also argued in court filings that 142 more claims turned out to be duplicates, named abusers who were part of religious orders or other groups not under the archdiocese’s authority or came from victims who were already paid individual settlements.
If all those claims in question are thrown out, it would leave 337 claimants – not 633.If all those claims in question are thrown out, it would leave 337 claimants – not 633.
While a smaller number of claimants would make it easier for opponents of the plan to muster enough no votes to get the church tossed from bankruptcy, it would also mean a higher average payout for each claimant.While a smaller number of claimants would make it easier for opponents of the plan to muster enough no votes to get the church tossed from bankruptcy, it would also mean a higher average payout for each claimant.
With 633 claimants, a $235m settlement would yield an average payout of about $370,000. With 337 claimants, the average would jump to almost $700,000. That would dwarf the average payment of $540,000 by the Catholic diocese in Rockville Centre on Long Island, New York, which many claimants pointed to as a fair standard for the New Orleans settlement terms.With 633 claimants, a $235m settlement would yield an average payout of about $370,000. With 337 claimants, the average would jump to almost $700,000. That would dwarf the average payment of $540,000 by the Catholic diocese in Rockville Centre on Long Island, New York, which many claimants pointed to as a fair standard for the New Orleans settlement terms.
On Tuesday, the church and a committee that negotiated the settlement on behalf of abuse victims filed a joint settlement plan and disclosure statements. The central terms of the agreement were announced in May, but there were a few surprises.On Tuesday, the church and a committee that negotiated the settlement on behalf of abuse victims filed a joint settlement plan and disclosure statements. The central terms of the agreement were announced in May, but there were a few surprises.
A key one is about what the church will disclose in a public archive of its files about child sexual abuse. The agreement says the archive will include claims against clergy already found by the archdiocese to be credibly accused of abuse – or clergy or church staff named in at least three verified claims. Those named by one or two claimants would not be included in the archive.A key one is about what the church will disclose in a public archive of its files about child sexual abuse. The agreement says the archive will include claims against clergy already found by the archdiocese to be credibly accused of abuse – or clergy or church staff named in at least three verified claims. Those named by one or two claimants would not be included in the archive.
Also, as WWL Louisiana and the Guardian first reported in June, archdiocesan bondholders accused the church of securities fraud for refusing to make $1m in interest payments to the investors after repeatedly promising all debts would be fully paid.Also, as WWL Louisiana and the Guardian first reported in June, archdiocesan bondholders accused the church of securities fraud for refusing to make $1m in interest payments to the investors after repeatedly promising all debts would be fully paid.
In new court documents, the bondholders further alleged that the church set a cap of $20m on real estate sales as a measure to protect itself from being forced to sell property to pay abuse claims. In new court documents, attorneys for the bondholders argued that Grabill should toss the archdiocese from bankruptcy court, saying the church has too many assets to be bankrupt – in part because the proposed settlement seeks to reduce the debt owed to church investors.
The bondholders’ attorneys further alleged in other new court documents that the church set a cap of $20m on real estate sales as a measure to protect itself from being forced to sell property to pay abuse claims.
The church took that step in 2020, back at a time when it believed most of the abuse claimants would have no standing to file lawsuits against the church in court because of how long they had waited to come forward. But the Louisiana state legislature passed a so-called lookback law that allows victims to file lawsuits no matter how long ago the abuse occurred, and the church’s efforts to strike down the law failed.The church took that step in 2020, back at a time when it believed most of the abuse claimants would have no standing to file lawsuits against the church in court because of how long they had waited to come forward. But the Louisiana state legislature passed a so-called lookback law that allows victims to file lawsuits no matter how long ago the abuse occurred, and the church’s efforts to strike down the law failed.
Ramon Antonio Vargas contributed reportingRamon Antonio Vargas contributed reporting