Archdiocese files bankruptcy plan

Albuquerque Journal [Albuquerque NM]

October 11, 2022

By Colleen Heidl

The Archdiocese of Santa Fe on Tuesday filed its long-awaited plan of bankruptcy reorganization to compensate nearly 400 clergy abuse survivors more than $121 million, with an additional $4 million promised by the Servants of the Paraclete, which ran a national treatment center that funneled dozens of offenders into New Mexico Catholic parishes and schools.

Six insurers will pay $46.5 million of the $121.5 million negotiated amount, with the remaining $75 million contribution by the archdiocese, which has put more than $69 million into an escrow account, with a $5.4 million promissory note that must be paid in full by March 31. In addition, the Paraclete and three religious orders that have been sued in state court for clergy abuse will contribute an additional $7.85 million.

The archdiocese’s contribution is considered to be among the largest settlements paid by an archdiocese in the country.

The plan comes nearly four years after the archdiocese filed for bankruptcy reorganization to try to resolve mounting abuse claims and stem financial losses that date back to the early 1990s. At the time, the archdiocese was facing about 36 lawsuits.advertisement

“It is impossible to overstate the tragedy of the Abuse that was inflicted on the children and teenagers of the Archdiocese,” states the archdiocese disclosure statement that accompanied the reorganization plan. “The Abuse was perpetrated by priests or others purporting to do the missionary work of the Roman Catholic Church. Instead of fulfilling their missions, those perpetrators inflicted harm and suffering.”

Lawyers representing abuse survivors have contended systemic child abuse occurred in New Mexico’s Catholic church for years, with past archdiocese hierarchy accused of covering up the improper sexual activity and transferring offending priests from parish to parish to avoid scandal.

Albuquerque attorney Brad Hall has represented more than 235 church abuse survivors in recent years, including 145 people who filed claims in the bankruptcy case. He told the Journal that the archdiocese’s filing of a plan starts the clock for winding down the bankruptcy case. “If all things are done on as short a notice as possible, survivors might finally see allocations in December,” he said.

“That’s four years after filing their Chapter 11 petition,” Hall added, “and finally represents the possibility of some closure for long suffering people who were badly hurt as children. I see light at the end of the tunnel.”

Survivors who filed claims still must vote to accept the plan, which needs a two-thirds approval to go forward.

A hearing on the plan is set for Wednesday before U.S. Bankruptcy Judge David Thuma.advertisement

After numerous delays occurred this summer with no reorganization plan filed, Thuma recently took on a proactive role setting deadlines for the archdiocese and the parties to file required documents. Thuma would be asked to confirm the plan if survivors vote to approve.

Much of the delay in reaching a payout amount occurred when the archdiocese negotiated with its insurers to cover part of the settlement amount, and a specialized mediator was called in to help reach a consensus.

Meanwhile, the archdiocese has sold numerous non-essential properties, sought mortgages on others, and enlisted its parishes to contribute to the settlement fund. Some parishes have contributed tens of thousands of dollars.

Under the plan, a separate trust for unknown claims would also be established.

A retired federal judge was appointed in June to determine the number of unknown tort claimants and conduct an analysis about how much money the archdiocese should set aside for the future payments of those claims.advertisement

The archdiocese stated in its filings on Tuesday that the plan provides for a larger distribution to those survivors who have filed claims “than would result from any reasonably available alternative.”

Also important to the survivor claimants is the non-monetary provision of the settlement agreement that requires the archdiocese turn over documents about the abuse scandal for public inspection at the University of New Mexico Zimmerman Library. Victims’ names and other identifying information will be redacted.

The Servants of the Paraclete, which had been facing an estimated 80 claims or lawsuits in state court, was established more than 50 years ago to provide treatment to Catholic priests from around the country for issues including alcoholism and pedophilia. It operated a now-closed facility in Jemez Springs, and worked with the archdiocese to send such priests to minister at various Catholic churches and schools as part of a “graduated program of rehabilitation.”

Under Archbishop of Santa Fe John C. Wester, the archdiocese has maintained a zero tolerance policy and keeps a list of credibly accused priests and clergy who worked in the archdiocese on its website. Currently 80 priests or clergy are named, with 29 listed as “living.” The archdiocese also has posted the names of nine other priests who have been credibly accused of abuse in other dioceses and at some point worked in the Santa Fe archdiocese.

“For many years, Clergy members within the Church violated the sacred trust placed in them by families, children, and the Church by committing acts of sexual abuse,” the archdiocese stated in one bankruptcy filing on Tuesday. “This was left unaddressed for decades. Survivors of abuse were ignored, called liars, shamed and felt abandoned by their Church. This conduct is contrary to the teaching and traditions of the Church.

“The Archdiocese settled many claims over a number of years but ultimately determined that a chapter 11 process would be more just to all victims, giving each an opportunity to participate on an equal footing in one forum.”