Frustrated with a lack of progress and mounting legal bills, the federal judge overseeing the long-running Archdiocese of New Orleans bankruptcy plans to appoint an independent expert to advise her how to move the case forward.
U.S. Bankruptcy Judge Meredith Grabill has expressed frustration in the past over the acrimony that has kept the two sides from working towards a resolution. At a hearing Thursday, she said enough is enough.
“This case at every juncture has been heavily contested. There is not one church bankruptcy in the country that has been contested like this one has,” said Grabill. “I need an independent assessment of where the case stands…The court feels like we have come to a decision point.”
Grabill’s plan to enlist outside advice came during a hearing where she had been asked to rule on proposals designed to curb legal spending in the case. She put off that ruling, saying she needs an independent expert to help her better understand the “disconnect” between the high legal bills — they are more than $40 million and rising — and the apparent lack of progress.
“The fees in the case are not really the problem,” she said. “They’re a symptom of the animosity and malaise.”
In a prepared statement, the archdiocese said, “We respect the decisions of the Court and will continue to work towards a speedy resolution to these proceedings.”
Lawyers for a group of several dozen abuse survivors said they were pleased with Grabill’s plan.
“I’m glad the court took it upon herself to do this,” said Frank D’Amico, an attorney for several dozen abuse survivors. “She recognizes there is an impasse here and she needs to act.”
Competing plans?
The Archdiocese of New Orleans filed bankruptcy in May 2020 amid mounting claims of clergy sex abuse dating back decades. At the time, about 30 lawsuits had been filed against the local Roman Catholic Church and Archbishop Gregory Aymond estimated settling the claims would cost $7 million.
Archbishop Gregory Aymond comes out of the Notre Dame Seminary Graduate School of Theology and offers a prayer before the Eucharistic Procession to St. Rita Catholic Church in New Orleans, Friday, June 7, 2024. (Photo by Sophia Germer, The Times-Picayune)
In the years since, more than 500 claims have been filed alleging abuse against more than 300 priests and deacons, and a settlement is expected to cost the church at least $100 million, not counting the legal and professional fees it has already paid.
At Thursday’s hearing, archdiocese attorney Mark Mintz said he plans to file a reorganization plan on behalf of the church in the coming weeks. It was the first time Mintz has indicated that a settlement proposal, which would spell out how much the church is willing to compensate abuse survivors, is imminent.
In another first, Andrew Caine, a lawyer for the court-appointed committee that represents the abuse survivors, said his team plans to file its own competing plan before a scheduled September 16 hearing.
John Denenea, who, with D’Amico and others represents several dozen abuse survivors but is not part of the official committee, said they may file their own plan, too.
Competing plans are filed in a bankruptcy case when a debtor and its creditors are unable to agree on a single plan. Ultimately, the court approves one plan over another, though it could toss them out. In other church bankruptcy cases, it has taken months or longer to finalize a settlement even after the initial plan or plans are filed.
A trustee for the archdiocese?
At Thursday’s hearing, Grabill also addressed a recent filing by attorneys for some abuse survivors calling for a trustee to take over the church’s handling of the bankruptcy from Aymond. In court documents, the attorneys claim Aymond and his advisors have mismanaged the case and are largely responsible for the high costs and slow progress.
Grabill said that measure, besides raising a host of problems, would drag the case out longer and push legal fees still higher.
Asked after the hearing, if they would reconsider that motion pending the outcome of the independent expert’s report, attorney Johnny Denenea said possibly.
“We’re in unchartered territory. Our motion was brought to bring this to a head so we’ll see what happens,” he said.
Grabill scheduled a special hearing for Tuesday to take up issues related to naming the independent expert.