‘finish Line’ near in Diocese Bankruptcy

Gallup Independent
April 27, 2016

The Diocese of Gallup may be just one week away from obtaining a confirmation hearing date for its Chapter 11 plan of reorganization.

Attorneys for the diocese filed a proposed plan of reorganization with the U.S. Bankruptcy Court March 21. The plan outlined how the Gallup Diocese, insurers and other Catholic entities will contribute more than $21 million to fund the plan, with much of it going to compensate 57 individuals who filed clergy sex abuse claims in bankruptcy court.

“This is a complicated plan because of the number of funding sources,” Susan Boswell, the diocese’s lead attorney, told U.S. Bankruptcy Judge David T. Thuma during a court hearing Tuesday. "It just has been a long process, believe me I know, and a lot of work, but I do think that we are at the finish line.”

Although attorneys were continuing to make minor changes to the plan and its disclosure statement, Boswell said those changes should be finalized before next week’s hearing.

As part of the plan of reorganization, the Gallup Diocese has been filing settlement agreements with the participating parties in the bankruptcy case. As of Thursday, the diocese had filed settlement agreements with insurers in the case, two Franciscan provinces and the Diocese of Phoenix. Settlement agreements with Catholic entities within the Diocese of Gallup such as its own parishes, the Catholic Peoples Foundation and the Southwest Indian Foundation have also been filed.

A settlement agreement with St. Bonaventure Indian Mission and School has yet to be filed. In addition, the Gallup Diocese has yet to file the non-monetary commitments it has been negotiating with clergy sex abuse claimants for several months.

Boswell and fellow diocesan attorney Thomas Walker told the court those documents would be filed soon.

Thuma expressed optimism that all the final pieces of the plan would be ready next week so he can schedule the confirmation hearing.

Abuse claimant concerns

Attorneys James Stang and Ilan Scharf, who serve as legal counsel for the Official Committee of Unsecured Creditors that represents the interests of clergy sex abuse claimants, raised two issues of concern to their clients.

“There are a number of survivors who live in the Phoenix area who’ve expressed an interest in attending the hearing but cannot afford to do so — the confirmation hearing,” Stang said. He asked Thuma to approve a video link setup in Phoenix’s U.S. Bankruptcy Court or in a private law office.

Scharf also asked Thuma to approve the employment of William L. Bettinelli, a former California Superior Court judge, as the case’s abuse claims reviewer, and allow Bettinelli to begin reviewing the abuse claims immediately rather than waiting until the plan of reorganization is confirmed. Scharf had filed documents regarding Bettinelli’s employment April 8.

“The reason for that is that many of the claimants are elderly,” Scharf said. “This case has lasted a long time, and the people who are litigating cases have been waiting a very long time, and in addition to people who have been waiting for years or decades for resolution here.

“We can essentially save about 90 days after the effective date before we get money out the door to the survivors,” Scharf added.

With no objections to Scharf’s requests, Thuma indicated he would sign an order authorizing Bettinelli’s employment and immediate review of the abuse claims.

Thuma scheduled the next court hearing for 1:30 p.m. May 3.








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