Judge praises dialogue between archdiocese and creditors’ attorneys in reorganization

The judge in the Archdiocese of Baltimore’s bankruptcy reorganization case said during a hearing Nov. 6 that she was glad to see that the attorneys for the archdiocese and those for the unsecured creditors’ committee were in dialogue to address certain issues before the court.

Judge Michelle M. Harner is overseeing the Chapter 11 reorganization in U.S. Bankruptcy Court, Maryland District. 

Addressing the attorneys present, Harner acknowledged that the bankruptcy process is different from litigation for survivors of child sexual abuse, who under a new Maryland law would be able to sue a person or institution for claims of abuse, no matter when the incident occurred.

The archdiocese’s filing for reorganization Sept. 29 automatically put a stay, or hold, on any related civil lawsuits against the archdiocese. At the first omnibus hearing Oct. 3, the judge also extended the stay temporarily to affiliated organizations, such as parishes and archdiocesan schools.

In the Nov. 6 hearing, the judge agreed to extend the interim stay for affiliated entities, based on the dialogue she saw between the archdiocese and the creditors’ representatives.

The bankruptcy process seeks a “global resolution,” Harner said. She added that although not every victim-survivor wants to go on the record in court, “there should be a way this court can provide people a chance to be heard.”

She said she didn’t want people to undervalue the bankruptcy process, because it can allow survivors to opt for confidentiality if they wish.

She said information facilitates resolution, and that is a benefit of the bankruptcy process.

Robert T. Kugler, an attorney with Stinson LLP who represents the Unsecured Creditors’ Committee in the case, told the court this is his 11th case representing the creditors committee in a bankruptcy case, including the reorganization for the Diocese of Harrisburg, Pa., which was closed with a final decree in August 2023, after filing for Chapter 11 in February 2020.

He said that conversations he has had with Baltimore archdiocesan representatives are ones that in the past have been many months into the process. “No one wants these cases to linger for years,” and that the fact that the sides are already talking about these issues “is a good thing.”

Harner encouraged the parties to continue to talk with each other.

Blake Roth, the lead attorney with Holland and Knight for the archdiocese in the case, told the Catholic Review after the hearing, “Today’s court hearing indicates that all the parties involved – the archdiocese as debtor, the creditors’ committee and other claimants’ attorneys, and the judge – want this process to proceed as quickly as possible, with transparency and collaboration. All of us want to ensure that victim-survivors can be compensated equitably, and we sincerely hope that can be done.” 

Roth represented the Diocese of Harrisburg in its reorganization.

At the hearing, Harner said she would enter an order allowing Epiq Corporate Restructuring to remain as the claims processing agent for the archdiocese. The creditors’ attorneys had some concerns about Epiq, which were resolved in discussion with the archdiocesan attorneys.

The Archdiocese of Baltimore filed a Statement of Financial Affairs with the court Oct. 31, which included listings of assets and liabilities.* 

The Archdiocese of Baltimore is now the 33rd diocese or archdiocese in the country to take such a path in order to come up with a compensation plan for all victim-survivors. In other diocesan bankruptcies, dioceses have used unrestricted assets and contributions from insurance carriers to resolve claims, according to Christian Kendzierski, executive director for communications for the archdiocese. 

Kendzierskii said it was too early to know what amount of contributions might be made by parishes and schools which, by contributing, would be exempted from future lawsuits for past abuse.

The court did not set a bar date, the date by which claimants would have to file in order to be part of the settlement. The next omnibus hearing in the case is scheduled for Nov. 27. A teleconference meeting of creditors is scheduled for Nov. 8.

Email Christopher Gunty at editor@CatholicReview.org

* Disclosure: Certain assets and/or liabilities of the Catholic Review were included in the Statement of Assets and Liabilities.

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