Bankruptcy Court approves motion to lift the automatic stay so that two alleged abuse cases could go to trial
Background:
The Archdiocese of San Francisco initiated a Chapter 11 bankruptcy case to address legacy abuse claims as a result of the reopening of the California statute of limitations under AB-218. The Archdiocese, known in the bankruptcy proceedings as “The Roman Catholic Archbishop of San Francisco, a Corporation Sole,” is also referred to as the “debtor.” All AB-218 claims are historical claims, and a vast majority of the dates of alleged abuse range from the 1950s to approximately 2008.
In the past, the Archdiocese and its insurers have paid more than $70 million in legal settlements to fulfill the Archdiocese’s responsibility for claims of abuse by archdiocesan clergy. The Archdiocese also has repeatedly examined and refined its robust Child Protection and Safe Environment program to ensure the utmost safety of all within the Archdiocese.
A Chapter 11 filing triggers an automatic “stay” that essentially freezes all litigation against the Archdiocese, which has been diligently working with all parties involved in the bankruptcy process to negotiate and finalize a fair and equitable settlement for abuse survivors. The settlement will be part of the Archdiocese’s Plan of Reorganization that needs to be approved by the Court before the Archdiocese can emerge from bankruptcy.
The motion granted by the court:
The Creditors’ Committee brought another motion before the court, asking for relief from the automatic stay so that two alleged abuse cases could go to trial.
The Archdiocese opposed the motion because allowing state court litigation to proceed diverts resources and attention away from the Chapter 11 process at a time when the parties should be solely focused on mediating a fair and equitable settlement. The Archdiocese is committed to using its resources to advance the mediation and reorganization process, which is intended to be the most viable option for compensating all abuse survivors fairly, allowing all claimants equal access and an equitable share of the assets available to pay claims and bring resolution to abuse survivors.
Despite these arguments, the Court granted the motion by the Creditors’ Committee to provide relief from the automatic stay to allow the two cases to proceed in state court to trial.
The Archdiocese knows from the experiences of other dioceses that have gone through the bankruptcy process that there will be rulings at times favorable to one party or the other. The Archdiocese remains focused on the big picture:
- Accelerate the Chapter 11 process to help abuse survivors achieve some level of closure because this is what they have asked the Archdiocese to do.
- Maintain the highest standards for protecting children and other vulnerable communities through a very effective Safe Environment Program, which is audited for compliance every year by a professional independent auditor.
Virtually all of the Chapter 11 diocesan or religious organization bankruptcy cases that have proceeded through a successful Chapter 11 plan confirmation have resulted in consensually confirmed reorganization plans, the exceptions being some non-settling insurers. In those cases, the terms for a consensual reorganization plan were reached following a mediation process in which the debtor, non-debtor entities, insurers, and the Creditors’ Committee representing the interests of survivors of sexual abuse participated.
The Archdiocese firmly believes in the mediation process, the mediators and the parties’ good-faith commitments to participate in mediation to achieve a global resolution in this case. The Chapter 11 process has created a structure for the transparent provision of information to the Creditors’ Committee and insurers. All constituents have professional representation. Skilled and experienced mediators are in place, and there is a framework for the parties to negotiate a global settlement. The Archdiocese will continue to work diligently toward constructive transparency and a timely resolution in collaboration with the other parties involved in this bankruptcy process.
At the same time, the Archdiocese remains focused on its mission to help parishes serve the spiritual needs of the faithful, celebrating Mass, offering the Sacraments, and providing religious education. The Archdiocese will continue to assist schools in providing the best Catholic education for students, and the Chancery’s many ministries will continue their outstanding services to the community.
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Media Contact:
Peter Marlow
[email protected]