Archdiocese 'is not Lehman Brothers'

By Haidee Eugenio Gilbert
Guam Daily Post
April 27, 2020

https://www.postguam.com/news/local/archdiocese-is-not-lehman-brothers/article_45440bfc-8750-11ea-a7ed-832fbfbe4c2a.html

The Dulce Nombre de Maria Cathedral-Basilica in Hagåtña is photographed on April 9, 2019.

A federal judge held off deciding on clergy sex abuse claimants' proposal to hire a financial adviser for up to $75,000 a month, saying the fees are "exorbitant" and the bankrupt Archdiocese of Agana "is not Lehman Brothers," a global financial services firm.

Chief Judge Frances Tydingco-Gatewood of the District Court of Guam said more money spent on professional fees means less money for each clergy sex abuse survivor.

"And if the debtor becomes insolvent, it not only negatively affects the debtor and all the creditors, but it will also have a massive impact on the entire Catholic community that the debtor serves," the judge wrote in her April 24 order.

The judge, instead, ordered the archdiocese and its creditors to resolve their differences that led to the creditors' request to hire their own financial advisers, Ankura Consulting Group LLC, headquartered in Washington, D.C.

This was one of two orders that the judge issued on Friday related to the archdiocese's bankruptcy case.

The request to hire a financial adviser came from the Official Committee of Unsecured Creditors, which includes clergy sex abuse survivors and Bank of Guam, in the archdiocese's bankruptcy case.

That request to hire financial advisers, according to the creditors, was prompted by the archdiocese's refusal to release pertinent documents related to finances and property assets, and to investigate discrepancies in the archdiocese's financial reports.

The judge ordered the archdiocese to "promptly provide documents" that the creditors committee requested "and make available its employees to the committee."

Tydingco-Gatewood ordered the archdiocese and the committee to file a joint status report no later than May 11.

Denial imminent

Tydingco-Gatewood said she's inclined to deny the hiring request in its current form because the debtor, or the archdiocese, "simply cannot afford it."

It has nothing to do with Ankura's qualifications or expertise, or the creditors committee getting assistance from a financial adviser, the judge said.

The bottom line, according to the judge, even with the proposed cap of $75,000 a month for the next four months, is that "such fees are exorbitant."

Initial proposed billable rates were $275 to $990 an hour for Ankura professionals, and $160 to $265 an hour for its paraprofessionals, plus reimbursements of actual expenses, court documents show. 

"The court reminds the parties that the debtor here is not Lehman Brothers. Approving this kind of professional fee would only run the debtor into insolvency," Tydingco-Gatewood said in an April 24 order.

At a recent hearing, the creditors committee told the court that the committee as a whole unanimously voted to retain Ankura.

"The court finds this statement at odds with Bank of Guam's written objection to the application," the judge wrote.

Nonetheless, the judge wrote, even if the creditors committee voted to retain Ankura with the understanding that such employment will further drain money from the "pot," the court does not find this convincing.

"Not all the creditors are willing to take that risk," she said.

The judge said "more importantly, the court does not take lightly the pain that the hundreds of survivors suffered and continue to suffer. It is precisely for this reason that the court must ensure that professional fees remain under control."

Tydingco-Gatewood said the court believes that the issues that brought the creditors committee to the point of filing an application to retain a financial adviser can be resolved if the parties "truly work together, with the best of intentions and in good faith."

"Debtor and the committee shall meet and confer for the next two weeks on the unresolved issues that led the committee to file the application," the judge ordered.

The archdiocese sought Chapter 11 bankruptcy protection in January 2019 under the weight of clergy sex abuse claims totaling more than $1 billion.

Nearly 300 lawsuits have been filed since 2016, alleging rape and sexual molestation by priests and other members of the archdiocese clergy from the 1950s up to the 2000s.