Associated Press - May 16, 2011
Judge holds hearing in Delaware diocese bankruptcy
Written by RANDALL CHASE, Associated Press
WILMINGTON — A federal bankruptcy judge indicated Monday that he is willing to approve documents outlining the Catholic Diocese of Wilmington’s proposed reorganization plan, including a $77 million settlement with nearly 150 alleged victims of priest sex abuse, once certain revisions are made.
Among other things, the judge said at a hearing Monday that he wants the diocese to clarify its plans for paying pensions to priests, including those who are confirmed child abusers.
In 2009, the diocese requested authorization to provide pension and medical benefits to six priests who were among those identified by the late Bishop Michael Saltarelli as having substantiated allegations of child abuse. But alleged victims of priest sex abuse objected, and the diocese agreed not to provide benefits to those priests for the duration of the bankruptcy case.
But according to attorneys for the diocese, the settlement plan contemplates that two confirmed child abusers, Douglas Dempster and John Sarro, would have their pension payments reinstated.
Judge Christopher Sontchi said he wanted the diocese to add language to its disclosure statement, which explains the reorganization plan to creditors who must vote on it, to specifically address the restoration of benefits for abusive priests.
Sontchi also directed the diocese to spell out how much individual parishes are contributing to the settlement, and how much they stand to receive from a pooled investment account shared with the diocese. The judge ruled last year that funds held in trust by the diocese on behalf of the parishes were commingled with the diocese’s own non-trust funds and would be considered part of the diocese’s bankruptcy estate.
The judge also said Monday that the diocese needs to clarify the extent to which the parishes would be releasing legal claims against the diocese as part of the settlement.
But he declined a request by certain creditors to force the diocese to disclose the assets and net worth of each of its parishes, to help them decide if it made sense to grant the release of legal claims as envisioned in the settlement.
“I don’t believe that it would be helpful or necessary to supply the net worth numbers for the parishes, on a parish-by-parish basis,” Sontchi said.
Diocese attorney Robert Brady told Sontchi that simply listing the assets of each parish would be misleading as far as providing creditors accurate financial information, and he indicated that undertaking a valuation analysis for each parish would be a difficult proposition.
“How do you value a church property?” he asked.
At the close of the hearing, Brady said he hoped to provide the judge a revised disclosure statement that has the consent of other attorneys in the case later this week.
The diocese sought bankruptcy protection in October 2009, on the eve of a series of trials involving child sex abuse lawsuits.
In the proposed settlement, the diocese agreed to pay roughly $77 million to some 150 alleged abuse victims. In return, the diocese, its parishes and affiliated entities would be released from all legal claims related to the church sex abuse scandal.
In a key victory for abuse victims, church officials also agreed to turn over internal church documents detailing how the diocese handled pedophile priests, who in many instances were allowed to continue to prey on children for years after their abuse became known.
Brady said the non-monetary provisions included in the Wilmington diocese’s settlement plan were the most extensive in any Catholic diocese bankruptcy.
But Donald Detweiler, an attorney for the diocese’s official committee of lay employees, who are concerned about the future of their pensions, urged Sontchi to reject the diocese’s disclosure statement. He said it left creditors with too many questions unanswered, and that the reorganization plan is “patently unconfirmable.”
“The (abuse) survivors have finally gotten a settlement, and it’s long, long overdue ... but we have lay employees here and we have other creditors who are also entitled and have rights and claims in this case,” he said.
The Wilmington Diocese covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics.
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