Diocese bankruptcy lurches forward again

By Elizabeth Hardin-Burrola
Gallup Independent
February 04, 2016

gallupindependent.com

ALBUQUERQUE – The Diocese of Gallup’s bankruptcy case is back on track — at least until next week.

U.S. Bankruptcy Judge David T. Thuma held a continued status hearing Wednesday afternoon after a dispute Tuesday threatened to derail the Gallup Diocese’s plans to file a plan of reorganization. Different representatives from both sides stepped forward to cooperate on a couple initial steps to possibly mend the breach.

On Tuesday, Thuma navigated a legal conflict between Catholic Mutual, the insurer for the diocese, and Michael P. Murphy, the future claims representative who has the responsibility of representing the interests of any clergy sex abuse claimants who might come forward in the future.

David Spector, an attorney for Catholic Mutual, had vehemently objected to allowing Murphy a review of Catholic Mutual’s financial books and records, while Murphy’s representative, Young Kim, declined to agree that Murphy would be satisfied with viewing only a financial balance sheet from Catholic Mutual. Thuma had told Kim to talk with Murphy and report back during Wednesday’s hearing.

Murphy, who is returning to the United States from Hong Kong Friday, appeared at Wednesday’s hearing telephonically. He and Everett Cygal, an attorney for Catholic Mutual, agreed to work together to get a protective order signed that would guard the confidentiality of Catholic Mutual’s financial information.

Murphy also agreed to view the documents Catholic Mutual is willing to show him, which are the most recent audited balance statement and recent unaudited balance statements.

“It has been the offer that Catholic Mutual has been making for several months now to the future claims rep,” Cygal said.

In response, Murphy said he’s been willing to look at those documents for some time.

If Murphy believes the documents indicate Catholic Mutual has the financial wherewithal to cover the future claims fund, he will give the court a “thumbs up” and presumably the Gallup Diocese’s settlement agreement and plan of reorganization will continue to move forward.

However, if Murphy’s inspection of the documents leads to a “thumbs down,” the case could once again derail by the next status hearing Tuesday.

Susan Boswell, the diocese’s lead bankruptcy attorney, told the court she was continuing to work on the plan of reorganization in spite of the dispute.

“This issue simply cannot be the thing that drives whether or not this plan gets confirmed,” Boswell said.