Diocese, creditors file joint reorganization plan - Catholic Courier

Diocese, creditors file joint reorganization plan

The Diocese of Rochester took another significant step in its bankruptcy case March 24 by filing — in conjunction with the creditors’ committee representing sexual-abuse claimants — a joint plan of reorganization and disclosure statement in support of the plan.

The reorganization plan follows the framework set in the Restructuring Support Agreement jointly filed Nov. 3, 2022, by the diocese and the Committee of Unsecured Creditors.

But whereas the RSA’s 28 pages sketched the key elements of reorganization, the 193-page plan and disclosure spell out, in great detail, myriad steps and obligations involved in the process. A full 17 pages, for example, are dedicated to the definition and interpretation of terms, ranging from “abuse” to “unimpaired” claims.

Like the RSA, the plan calls for the diocese, its parishes and related Catholic entities — which the plan terms “Participating Parties” — collectively to contribute $55 million to a trust that would be established for the benefit of sexual-abuse claimants.

The plan states that two diocesan insurers, LMI and Underwriters, also have agreed to contribute to the trust $19.5 million and $1.1 million, respectively, in resolution of insurance claims against them.

While the Underwriters figure is equal to the amount offered in a June 2022 settlement proposal, the LMI offer is 17% greater than its June 2022 offer and 30% larger than LMI’s contribution in a proposed 2021 settlement agreement.

Initial trust funding thus would total $75.6 million. However, the plan also envisions the trust receiving funds from future recoveries from diocesan insurers and other sources.

The trust would distribute funds to abuse claimants according to an allocation protocol developed by the Committee of Unsecured Creditors. Neither the diocese nor the participating parties will have any involvement in or recourse regarding the trustee’s decisions about claim distributions.

In exchange, by means of the plan’s integral “channeling injunction,” the trust will assume liability for any and all sexual-abuse claims against the diocese, the participating parties and settling insurers.

Numerous steps remain before the U.S. Bankruptcy Court could approve the reorganization plan.

Nevertheless, “We are pleased to enter into this joint resolution with the Creditors Committee to provide recompense to the survivors,” noted a diocesan statement issued March 24.

“Once again Bishop Salvatore R. Matano renews, with deep sincerity, an apology to the survivors of sexual abuse of minors, who have been harmed by these egregious acts, as well as to their families and the faithful of our Diocese who have endured this sad moment in our history,” the statement added.

Tags: Diocesan Bankruptcy Updates
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