Thousands of pages of documents, millions of dollars in legal fees and dozens of contentious court hearings have finally brought the Archdiocese of New Orleans to the central questions of its four-year-old bankruptcy case: What compensation is due to people who were raped or molested by clergy decades ago? And how will the church come up with the money?
On Friday, in dueling legal filings, attorneys for the local Roman Catholic church and the committee that represents nearly 550 survivors of clergy sex abuse laid out competing visions for how the nation’s second-oldest diocese should settle the claims against it.
Nearly $900 million separates the two sides. Under the archdiocese’s plan, people who have credible claims of sexual abuse by clergy would receive $62.5 million, or roughly $114,000 each. The settlement plan proposed by court-appointed attorneys of abuse survivors called for a $994 million settlement, which would translate to $1.8 million each.
In the coming weeks, the task of attorneys on both sides will be to come to some agreement under the eye of a mediator and U.S. Bankruptcy Judge Meredith Grabill, who has presided over the case since Archbishop Gregory Aymond filed for Chapter 11 bankruptcy protection in 2020.
Archbishop Gregory Aymond at his residence in New Orleans on Wednesday, May 29, 2024. (Photo by Chris Granger, The Times-Picayune)
And while the financial chasm between the plans is massive, lawyers and others with experience in church bankruptcy cases said Monday that it is nevertheless potentially bridgeable now that the two sides had put their proposed settlements out for public scrutiny.
“Once these plans are out there, they can finally come together and, hopefully, merge,” said Lleander James, an Idaho-based attorney who has represented abuse survivors in several church bankruptcy cases since 2007. “With the plan on file, both sides open themselves to the public and to criticism, and that can create pressure.”
A history of settlements
Since 2002, 37 Roman Catholic organizations in the U.S. have filed for Chapter 11 bankruptcy as a way to settle dozens or hundreds of clergy sex abuse claims against them.
To date, 24 cases have been resolved, according to Marie T. Reilly with Penn State Law, who has studied and tracks church bankruptcies, creating a road map for how church bankruptcies can play out.
Most importantly, the cases offer a range of what compensation for horrific acts of abuse might entail. Of the cases that have come to a resolution, the median settlement amount is $310,460 per survivor, though there is a wide range that has shifted higher over time. Survivors in Fairbanks, Alaska, received about $34,000 each. In San Diego, each got nearly $1.4 million.
One of the biggest questions that will have to be answered in the local case is how much the five church insurance companies will contribute to a settlement, if anything.
The archdiocese plan would turn over to a trustee the right to sue any of the insurers on behalf of survivors. If those suits were successful, it could considerably increase the total $62.5 million settlement pot the church is offering.
That’s what took place in Archdiocese of Camden, New Jersey. Earlier this year, the local church there successfully settled its three-year-old case for $87.5 million, though one of the insurers there is still fighting. The Archdiocese of Rochester is working through a similar situation.
In New Orleans, the competing $994 million plan proposed by attorneys of the survivors includes $777 million from the insurance companies, which those insurance companies they haven’t agreed to.
“The insurance companies typically hold out,” James said. “That’s what they do.”
Attorneys for the archdiocese declined to comment beyond remarks Aymond made Friday in a letter to the faithful.
Attorney Soren Gisleson, whose firm represents about one third of the abuse survivors, has said his clients fully support the committee plan, even though “no amount of money can compensate them for what the archdiocese did.”
How to pay?
In some dioceses, paying off abuse claims has involved selling off valuable church real estate holdings.
In the Archdiocese of Boston, where the priest abuse scandal came to prominence two decades ago, the church sold its 75-year-old Italianate mansion that was home to its archbishop in order to settle $85 million worth of claims, though that settlement was reached outside of a bankruptcy.
The Archdiocese of Minneapolis-St. Paul also sold it archbishop’s residence, as well as its headquarters building, to settle its 2018 bankruptcy, which ultimately paid survivors more than $467,000 each.
In Santa Fe, New Mexico, the archdiocese held an online auction of properties to fund its $132 million settlement.
Other dioceses have dug deep into their reserves, which is what the Archdiocese of New Orleans is proposing. Though it has already sold off about $13 million in real estate, including its former office building at 1000 Howard Ave., it says it can only sell up to $20 million without refinancing $40 million of bond debt at what would be an unfavorable interest rate.
As a result, its plan only includes a handful of additional properties it intends to sell, beyond what it has already listed, including: four storage areas on Old Gentilly Road, the old Holy Guardian Angels mission church in Bridge City, a priests vacation villa in Covington and a vacant parcel on Oak Harbor Boulevard in Slidell.
Most of the $62.5 million the archdiocese is offering would come from cash reserves of more than $81.6 million as of June 30, and from selling off part of an investment portfolios of more than $260 million.
The competing plan filed by the survivors committee lists more than 60 pieces of real estate owned by church parishes, which are not technically in bankruptcy, that it believes could be sold to generate a large chunk of the settlement.
New Orleans Archdiocese Administration offices on Walmsley Ave. in New Orleans, La. Friday, Nov. 2, 2018.
That plan also lists more than 500 pieces of art, antiques and jewelry it suggests could be sold. The trove includes old Carnival ball pins, bishops rings made from 18-carat gold and the stained glass windows in the St. Louis Cathedral.
In hearings that will be held later this fall, experts say the two sides will argue over details about selling properties, what’s fair game and what’s not.
“At some point, there will be a hearing and there is usually a fight and sometimes those trigger objections from the U.S. Trustee,” said Mike Finnegan, an attorney with Jeff Anderson and Associates, which has represented hundreds of abuse survivors around the country. “Those can sometimes last days or stretch out for weeks.”
What about the parishes?
Another major question that hangs over the Archdiocese of New Orleans case as well as other church bankruptcies around the country is a recent ruling by the U.S. Supreme Court in the bankruptcy of opioid maker Purdue Pharma.
In that case, Purdue’s owners, the Sackler family, agreed to contribute $6 billion toward an opioid abuse settlement in return for immunity from future lawsuits against them personally. The high court said that agreement wasn’t allowed, a ruling that scuttled the settlement because those so-called affiliates are open to lawsuits even if the bankruptcy case with opioid abuse victims is settled.
Church bankruptcy experts say that ruling has implications for affiliates — church parishes and charitable organization that are not technically in bankruptcy themselves but have typically contributed to settlements in return for immunity for future lawsuits.
In Rochester, where an archdiocesan bankruptcy case was nearing completion, the ruling recently sent that case back to the drawing board.
“No one is quite sure what is going to happen,” Finnegan said. “Everything is up in the air.”