New plan, other developments move forward in archdiocesan bankruptcy process

The Archdiocese of Baltimore submitted a second revised form plan June 5 to settle its Chapter 11 bankruptcy reorganization, increasing the amount proposed to $246 million to settle civil claims from decades of child sexual abuse by clergy or employees of the Church.

The plan, revised from one filed May 15, adds a projected $17.1 million from other Catholic entities, including parishes and other entities, which are considered additional debtors in the plan. It also adds $60 million from another insurance carrier, bringing the contributions of insurers to $185 million.

The plan proposes the archdiocese contribute $43.9 million, which it says is the liquidation value of its unrestricted assets. Each parish that is an additional debtor would contribute the lesser value of either “the full amount of uninsured Survivor Claims” asserted against it, or three years’ net income of the parish.

“While the Debtor has proposed the Plan in consultation with the Additional Debtors and believes the Additional Debtors will elect to seek such relief, the election by each Additional Debtor to seek relief under chapter 11 of the Bankruptcy Code is not a foregone conclusion and is integral to the implementation of the Plan and payment to Survivor Claimants of material portions of the compensation contemplated by the Plan,” the proposal said.

The plan also envisions between $85 million and $132 million in additional contributions from other settling insurers. 

Although the number of valid claims has not yet been determined, the plan notes that if there are 800 valid claims, the average per claimant would be from $418,000 to $475,000. The average would be higher if fewer claims are determined to be valid. In more than 20 dioceses that have settled for claims of child sexual abuse since 2004, the average settlement was $369,000.

The Unsecured Creditors Committee, which is a committee of seven victim-survivors who represent all the survivors in the case, proposed a plan April 3 that proposed a contribution of $441.3 million from the archdiocese and other Catholic entities, plus at least $100 million from a single insurance company. 

Other insurance companies have continued negotiating with both the archdiocese as debtor and the committee.

The committee based its proposal for the contributions by the “Consolidated Catholic Entities” on its premise that the archdiocese, parishes and schools are all one entity for legal and practical intents. Attorneys for the archdiocese argued that civil and canon law note that they are separate entities. 

However, Judge Michelle M. Harner, who oversees the case, ruled April 29 that “the structure of the Debtor as a separate entity from, and a service provider to, the nondebtor parishes and schools appears to align with general diocesan structure and Maryland law.”

The Acting Trustee for the U.S. Bankruptcy Court, David W. Asbach, also objected to the Creditors Committee plan, arguing May 7 that its plan is “patently unconfirmable” because the parishes and schools are separate nonprofit corporations and cannot be forced into bankruptcy.

In another development in the case, the court issued a ruling June 5 rejected a motion by the Creditors Committee to lift the automatic stay of litigation in bankruptcy cases so that seven victim survivors could pursue civil claims in state court. The committee selected the seven “test cases” to challenge the Church and certain insurance companies under the amended Child Victims Act, passed in Maryland in 2023 and amended in 2025.

In her order, Harner said, “At this stage of the case – a mere three months from an evidentiary hearing on confirmation of a plan of reorganization for the debtor – the Court finds that the relevant factors tip in favor of maintaining the status quo and continuing the automatic stay through at least the Court’s resolution of the confirmation hearing. This approach allows all parties to focus on achieving a feasible and confirmable plan of reorganization without distraction or delay.”

The order noted that by filing for bankruptcy reorganization, the archdiocese, as debtor, brought all the creditors and their respective claims as victim-survivors into “one forum and one case. It also ensures that all similarly situated creditors will receive the same fair and equitable treatment. 

“There is no doubt that bankruptcy disrupts and delays creditors’ rights and remedies, but it also can, in the end, promote a more fair and a more just resolution for all,” the order said.

In issuing the order to keep the automatic stay in effect, the court also ordered that if a plan of reorganization has not been confirmed by the end of September, the judge will hold another hearing on the matter.

The court held a preliminary hearing June 8 to discuss disclosure statements that would be sent to accompany the plans to creditors in the case. Harner noted that the plans and the disclosure statements from the debtor and the creditors committee have some elements in common but are far apart on the number of the proposed settlements and certain specifics of the plan.

The judge seemed to express frustration that the process is not moving toward conclusion as fast as she would like. Harner has set deadlines for certain points of the case, with the intention to confirm a plan by the third anniversary of the archdiocese filing for bankruptcy Sept. 29.

She told the attorneys for all parties in the case that she would schedule a hearing every Monday until there are one or two disclosure statements to approve, in order to keep the process moving. That said, she also encouraged the sides to keep talking directly to each other, and added that she is willing to postpone a hearing if the sides are talking and close to resolving certain elements.

The solicitation package must be approved by Aug. 5 so that it can be mailed by Aug. 12 to every creditor entitled to vote, with the deadline for objections and voting set for Sept. 9. The trial to confirm the plan begins Sept. 14. “As I’ve said on numerous occasions, this case is too important, there’s too much at stake for us to lose sight of the end goal, so we’re going to work together to see where we go,” Harner said.

During the hearing, Edwin Caldie, attorney for the Creditors Committee, said that one of the things he has heard a number of times from victim-survivors is “it’s not about the money so much as it is about what the money represents,” which is accountability for the harm they experienced. He said many survivors would rather have led money and the Church held authentically accountable than to have a settlement that does not hold the Church accountable but provides more money in the settlement.

Harner noted that there is more to every Chapter 11 plan than just restructuring finances and hoped that there would be some commonality in the other aspects of the case that could start to pull the parties together.

Email Christopher Gunty at editor@CatholicReview.org

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