Diocese files for Chapter 11 reorganization

The Diocese of St. Cloud filed a voluntary petition June 15 for relief under Chapter 11 of the bankruptcy code in the Minnesota Bankruptcy Court, the diocese announced in a news release.

The filing follows the announcement May 26 of the diocese and survivors of clergy sexual abuse reaching agreement on a framework for a resolution of all clergy sexual abuse claims against the diocese and area parishes. In the Chapter 11 bankruptcy, the framework for resolution will include a consensual plan of reorganization that provides for a $22.5 million trust to compensate survivors of clergy sexual abuse.

The funds to be used to compensate survivors are made up of insurance and benefits coverage settlements, cash and property contributions from the diocese, and contributions from parishes. The funds will be administered by an independent trustee appointed by the bankruptcy court, with input from a committee representing the interests of survivors.

This Chapter 11 reorganization represents the diocese’s commitment to finding a fair resolution for survivors of sexual abuse while continuing its ministry to those it serves throughout the 16-county diocese, the news release said. “The diocese remains committed to preventing sexual abuse, holding accountable those clergy who are credibly accused of abuse, and helping survivors find healing,” it added.

The Minnesota Child Victims Act, which lifted for three years the civil statute of limitations for allegations of past sexual abuse of minors, ended in May 2016. During that time, in excess of 70 civil claims were made against the diocese. In February 2018, Bishop Kettler announced that the diocese planned to file for Chapter 11 bankruptcy reorganization as the best way to resolve the claims.

As part of the bankruptcy process, a reorganization plan will be submitted to the court for confirmation premised on the resolution framework between the diocese and parishes, and the survivors. The court will set a date by which all claims against the diocese must be filed. When the date is set, it will be announced publicly with information about how to file a claim.

The diocese said information about the Chapter 11 reorganization is available on the Bankruptcy Court’s website, https://www.mnb.uscourts.gov. The date by which claims must be filed and filing information also will be posted on a special reorganization webpage at www.stcdio.org/reorganization. The webpage includes other reorganization-related information, such as public statements, legal documents, frequently asked questions, a list of clergy likely to have abused minors, how to report abuse, and safe environment resources.

Author: The Central Minnesota Catholic

The Central Minnesota Catholic is the magazine for the Diocese of St. Cloud.

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