Diocese Bankruptcy Case Mediator Named

By Kevin Parrish
Record
February 8, 2014

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20140208/A_NEWS/402080329

SACRAMENTO - A retired bankruptcy judge from Reno has been appointed mediator in the Chapter 11 reorganization case of the Catholic Diocese of Stockton.

Gregg W. Zive, 68, is expected to convene mediation sessions between diocese attorneys and those representing creditors within 30 days. He retired from the federal bench in 2011 but serves when needed.

Zive was appointed by U.S. Bankruptcy Judge Christopher M. Klein, who is overseeing both the diocese's bankruptcy and the Chapter 9 bankruptcy of the city of Stockton.

Last month, Stockton's became the 10th diocese in the United States for file for bankruptcy protection. It took the dramatic legal step because of the financial drain from continuing court settlements stemming from sex-abuse lawsuits. Over the past two decades, the diocese has spent $32 million in legal fees and settlements.

Zive, past president of the National Conference of Bankruptcy Judges, helped mediate the bankruptcy cases of the Diocese of Spokane, Wash., and the city of San Bernardino.

"The mediator brings the parties together for a plan of reorganization," said Steven H. Felderstein, senior partner of the Sacramento-based law firm of Felderstein, Fitzgerald, Willoughby & Pascuzzi. "He has experience at doing this, and that's why Klein selected him."

Felderstein and his partners represent the diocese.

Zive was sworn in as a U.S. bankruptcy judge for the District of Nevada in 1995. He was reappointed in 2009 and retired two years later.

He received an undergraduate degree in journalism from the University of Nevada, Reno, in 1967 and his law degree from the University of Notre Dame in 1973.

"Klein expressed the view that in Chapter 11 cases, ultimately, most parties agree on a plan," Felderstein said. "The mediator speeds that along."

Depending on Zive's timetable, a bankruptcy status conference scheduled for Feb. 26 in Sacramento may prove to be a "non-event," in Felderstein's words.

"Klein likes to have the parties report on what is going on in the case outside of his view," the attorney said. "But that hearing was set before Zive was selected."

Zive will conduct his own meeting with stakeholders.

In a statement from the Stockton diocese, Bishop Stephen Blaire said, "It is our hope that the issues in this case can be settled through mediation and that resolutions can be found that will be in the best interest of all involved."

Documents revealing financial details were filed last week with the bankruptcy court.

The diocese assets total $7.2 million, and an estimated $2 million of that includes real estate properties:

» A pastoral center

» The bishop's residence

» A convent for the Franciscan Missionary Sisters

» The St. John Vianney House/Newman Center at University of the Pacific

» Donated, vacant property in Valley Springs

» Bank and investment accounts used to finance operations, pension plans and self-insurance programs

Liabilities total nearly $11.9 million. That figure does not include the anticipated costs of pending lawsuits stemming from potential sex-abuse cases. It does include:

» Outstanding loans, wages and benefit payments that are due employees

» Retirement claims for priests

"We are paying our bills," said Sister Terry Davis, a diocese spokeswoman. "But I don't know how this will roll out. We know we are facing a major reorganization."

The diocese - and its Sacramento law firm - are making the court filings available to the public.

"We are committed to being open and transparent," Davis said. "The bishop wants it to be that way."

Contact: kparrish@recordnet.com