Agreement reached on property transactions in bankruptcy case

A federal bankruptcy judge has approved two property transactions by the Archdiocese of Baltimore, applauding the church and a committee representing abuse survivors for resolving their disputes through negotiation as part of ongoing bankruptcy proceedings Oct. 14 in Baltimore.

The actions came during the latest hearing in the archdiocese’s Chapter 11 bankruptcy case, which continues to move forward in U.S. Bankruptcy Court for the District of Maryland.

The hearing focused on a pair of real estate matters – the lease of farmland in Baltimore County for a solar energy project and the transfer of a small strip of land from Archbishop Spalding High School in Severn to facilitate a parking lot.

Judge Michele M. Harner, who is overseeing the archdiocese’s reorganization, said both arrangements were within the church’s “sound business judgment” and would help sustain operations during the Chapter 11 process. She noted that such transactions are “a routine but important part of ongoing bankruptcy administration” and praised the parties for their cooperative approach.

“These kinds of matters certainly come up in a Chapter 11 case such as this,” the judge said, adding that the agreements set “a helpful protocol” for handling property issues going forward.

The first matter concerned a long-term lease of the archdiocese’s Belfast property in Baltimore County to CI Renewables for construction of a solar energy facility. The property, currently used as farmland, had previously drawn objections from the creditors’ committee and a survivor claimant.

Catherine Hopkin, one of the attorneys for the archdiocese as the debtor in the case, said the revised lease reflects a “productive compromise” with the committee representing survivors of childhood sexual abuse. The updated terms increase the minimum number of acres under lease, generating more income; and shift the risk of interconnection cost overruns from the archdiocese to the tenant. The lease runs up to 20 years, with preliminary rent continuing until construction starts.

Hopkin said lease payments will be set aside in a segregated, interest-bearing account until the archdiocese’s reorganization plan is confirmed.

Drew Glasnovich, attorney for the creditors’ committee, said the committee’s energy-law experts found the lease consistent with market standards. “The economics make sense,” he said, explaining that even in a worst-case analysis, the lease will yield more value for creditors than an immediate sale of the property. The committee withdrew its prior objection and endorsed the deal.

The second transaction involved a small parcel at Archbishop Spalding High School in Severn, where the archdiocese plans to convert an underused sports field into a parking lot. Anne Arundel County approved the project on the condition that the church dedicate a narrow strip of land to the county.

“It’s a fair exchange for the county’s approval, which will improve the value of the site,” Hopkin said. Glasnovich agreed.

Judge Harner, who was to give a final review of the details of the agreements prior to entering a stipulation and consent order approving them, commended both sides, noting that the resolutions “allow the debtor to continue to operate while still maintaining focus on reorganization.”

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