Judge gives Norwich diocese a sixth extension to file bankruptcy plan

The Day [New London CT]

November 19, 2022

By Joe Wojtas

For the sixth time, federal bankruptcy Judge James Tancredi has extended the deadline for the Diocese of Norwich to file a bankruptcy plan to Jan. 11, 2023.

Meanwhile, the possible funds available to pay victims may be tens of millions of dollars less, as the diocese’s insurer has said it will only pay $2.5 million of the available $21 million in coverage.

In its motion seeking the sixth extension, diocesan attorneys wrote that it continues to make progress on a plan that is acceptable to its 170 creditors, including 142 people who say they were sexually assaulted by diocesan priests and clergy. The latest deadline was set to expire Friday.

Federal bankruptcy court filings show that the Diocese of Norwich has spent more than $2.9 million on legal and other fees since it filed for bankruptcy in July of 2021.The total was for expenditures through Oct. 17.

The total amount of legal fees spent by the diocese on the bankruptcy though are about $5 million as it had expended $980,000 in the months leading up to bankruptcy and another $800,000 from Oct. 17 to Nov. 15. In all, there have been more than 900 legal filings in the case.

“Monumental advances” from mediation

In their Oct. 28 motion seeking the extension, diocese attorneys wrote that four mediation sessions had been held between the parties, with a fifth slated for Nov. 6, and that all parties including the committee representing victims “acknowledge that monumental advances have been made” to reach agreement on a reorganization plan for the diocese.

As they have argued in previous motions for extension, diocesan attorneys stated the bankruptcy case is “highly complex” and the process of reaching an accurate and fair assessment of the diocese’s liability for the sexual abuse claims and addressing how to cover them is complicated.

They wrote that extending the deadlines for the diocese to submit its plan and then gain approval from the involved parties will ensure that the groups will be able to “capitalize on the progress” they have made so far.

The diocese filed for Chapter 11 bankruptcy in July of 2021 as it faced more than 60 lawsuits filed by men who say they were sexually assaulted as boys by Christian Brothers, staff and students at the diocese-run Mount Saint John Academy, a school for troubled boys in Deep River, from 1990 to 2002. Since then 82 additional people, whose sexual assault allegations involved not only the school but diocesan churches, have filed claims in the bankruptcy case. In addition, various other creditors are seeking a portion of the diocese’s assets.

The bankruptcy process, which freezes lawsuits against the diocese, will assess the assets of the diocese and determine how much each victim will receive in damages. The 51 parishes in the diocese have joined the diocese in seeking bankruptcy protection from sexual abuse claims and will have to contribute funds to the settlement. This would leave victims unable to sue the parishes in the future. March 15 was the deadline for victims and others to file claims in the case.

It is expected, though, that the 142 victims will receive a fraction of what they could received if their lawsuits went to trial or were settled.

Insurance coverage dispute

The attorneys for the committee representing the victims and creditors are also asking Tancredi to give them authority to take action against Catholic Mutual Relief Society of America, the diocese’s insurance carrier, for agreeing to pay only a fraction of what the committee says is the available coverage for sexual assault claims.

According to the committee’s motion, Catholic Mutual has said it will pay $2.5 million of the claims, while the committee says contracts call for $21 million of coverage. The payment by Catholic Mutual would become part of the assets that could be distributed to the victims.

The committee states that because the diocese has failed to file a lawsuit to obtain the $21 million, the committee should be permitted by Tancredi to enforce the coverage limits in the diocesan insurance policies. It said it would accept having the policies assigned to a trust which could seek payment for the claims.

The diocese responded saying it holds the same view as the committee regarding Catholic Mutual’s responsibility, that it has drafted a complaint and is negotiating a resolution with the committee.

Victim 143

A 143rd victim recently came forward and filed a claim after the March deadline saying he was repeatedly sexually assaulted by the late Rev. Edward P. McGrath while a student at St. Thomas More School in Montville from 1988 to 1992. Some of the alleged assaults and attempted rape happened during confession in the school chapel.

His attorney has asked he be allowed to join the list of victims in the bankruptcy as the now middle-aged man was unaware of the bankruptcy or filing deadline until July.

McGrath appears on a 2019 diocesan list of priests who had “allegations of substance” made against them regarding the sexual abuse of minors.

The diocese has opposed adding the man to the list of victims in the bankruptcy case because he missed the deadline. In addition, attorneys argued St. Thomas More School is independent of the diocese and “the alleged perpetrator was never employed, or placed or supervised by the Diocese.”

Tancredi heard arguments on the issue Tuesday but has not yet ruled on the issue.