Attorneys for diocese priest abuse victims seek to file own bankruptcy plan

The committee that represents 142 people who say they were sexually assaulted by priests and clergy in the Diocese of Norwich said Friday the diocese’s $29 million bankruptcy plan to compensate the victims is “woefully inadequate.”

The comment came as attorneys for the official Committee of Unsecured Creditors announced they would be taking the “extraordinary step” of seeking authority from a federal bankruptcy court judge to file an alternative plan of reorganization “in the hopes of providing all survivors fair and reasonable compensation” while bringing “some measure of accountability to the Norwich Diocese and the other implicated Catholic organizations.”

“While the $29 million in total proposed in the Diocese’s plan, standing alone, is admittedly a large sum of money, when shared among all of the survivors who suffered greatly as children and continue to suffer to this day, it is woefully inadequate,” said committee co-counsel, Eric Henzy.

Some of the victims could receive as little as $2,500, according to the diocese’s plan.

Ice Miller, the law firm representing the diocese, did not respond to a request for comment about the committee’s request to submit a competing plan.

The Roman Catholic diocese filed for bankruptcy in 2021 as it faced more than 60 lawsuits filed by men who say they were sexually assaulted as boys by Christian Brothers, staff and students at the diocese-run Mount Saint John Academy, a residential school for troubled boys in Deep River, from 1990 to 2002. Since the bankruptcy filing, 82 additional people, whose sexual assault allegations involved not only the school, but diocesan churches, have filed claims in the bankruptcy case.

Since the diocese filed for bankruptcy, it has received seven extensions giving it the exclusive right to file a bankruptcy. It negotiated with its insurance company, parishes, the committee representing victims and creditors and other entities to create a plan and fund to compensate the victims.

Two weeks ago the diocese filed its plan which calls for $29 million to be distributed to creditors, including the victims, who will have to vote to approve on the plan but will not know how much they would each receive before voting. Part of the $29 million will come from the sale of St. Bernard School in Montville.

The diocese has said the plan is most equitable way to compensate victims but the committee says the diocese and its affiliates “have failed to make a just offer to the survivors” after months of mediation.

The diocese plan calls for paying victims who are too old under state law to file lawsuits, $2,500 each. The plan also means the victims would receive a fraction of the approximately $1 million awards the diocese had paid victims before it filed for bankruptcy protection in July 2021.

Because of the filing by the diocese ― which was later joined by its 51 parishes in seeking bankruptcy protection ― victims are prohibited from filing lawsuits against them and current lawsuits cannot proceed.

A statement from Henzy and co-counsel Stephen Kindseth said that the diocese’s plan fails to take into account all of its substantial assets and other potential sources of funding including significant amounts owed to it from certain parishes and affiliates.

In addition, it states the diocese’s plan proposes only “a minimal financial contribution,” estimated to be less than $2.9 million, from the 71 parishes and other Catholic entities who have joined the bankruptcy and seek a complete release of liability from the 142 claims plus all future sexual abuse claims that may have taken place prior to the effective date of the diocese’s plan.

The committee said its plan, if approved, “would require substantial and appropriate contributions” from the diocese “based on the assets it owns and the liabilities it faces.”

“These contributions would be paid to the settlement fund established for the benefit of survivors, while still permitting the Norwich Diocese to continue with its mission,” they said.

The committee’s plan would also permit a trustee to enforce “the substantial payment obligations” owed to the diocese by certain parishes and other Catholic entities and also allow the trustee to recover all available sexual abuse coverage due from Catholic Mutual, the diocese’s insurer, and other insurers for the benefit of the survivors.

“The Committee believes that these mechanisms, among others to be set forth in its plan, would enable the Survivors to realize a far more appropriate recovery than that offered by the Norwich Diocese in its plan of reorganization,” they stated adding in court filings that the diocese is trying to protect its parishes and insurers with its plan.

They said the committee would also seek bankruptcy court approval for a disclosure statement that would allow victims and other creditors to vote on the committee’s plan.

In a court filing Friday, the committee said the diocese “has proven unwilling or unable to pursue and liquidate available assets” and “has had more than enough time, in fact the statutory maximum, to propose a confirmable plan that has the support of creditors, and it has failed to do so.”

Federal bankruptcy court Judge James Tancredi will now decide how to proceed, including what plan the victims will vote on.

“The Committee believes that the Norwich Diocese’s unilateral approach will ultimately fail and, in the process, serve only to further deplete its resources that could be used for the benefit of Survivors and other creditors, or to advance its mission within the communities it serves. The Committee seeks only fair and reasonable compensation for all creditors including the Survivors, and accountability from all responsible parties, which it hopes to accomplish through its own plan of reorganization,” Kindseth said.

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