New bankruptcy plan seeks millions more for Norwich priest abuse victims

The Day [New London CT]

March 1, 2023

By Joe Wojtas

The committee that represents the 143 people who say they were sexually assaulted by priests and staff of the Roman Catholic Diocese of Norwich filed a bankruptcy plan Tuesday that calls for the diocese, its 51 parishes and insurer to contribute millions of dollars more to compensate the victims.

The Official Committee of the Unsecured Creditors submitted its own plan in federal bankruptcy court after it called the diocese’s $29 million bankruptcy plan to compensate the victims as “woefully inadequate.” It said the diocese has substantial assets and other potential sources of funding, including significant amounts owed to it from certain parishes and affiliates.

“After listening for more than a year and a half to the Diocese, its Parishes and its insurer, Catholic Mutual, telling the Creditors’ Committee what they can’t do for the survivors, the Creditors’ Committee has been allowed through its own Plan of Reorganization to say what can and should be done for them,” said Stephen Kindseth, one of the attorneys for the committee on Wednesday.

The plan calls for the diocese to turn over 10 properties it owns including St. Bernard School to the Official Committee of the Unsecured Creditors so they can be sold. The plan states the committee is receptive to the diocese plan to sell St. Bernard School and other schools with the proceeds going to the victims. The diocese has been discussing the sale of the school for $6.2 million to a group of alumni trying to keep it open while another group, Thames River Acquisitions LLC, has said it will pay $6.5 million.

Another major impact of the plan would be on 141 Catholic entities, including 51 parishes, which under the earlier diocesan plan would have contributed $3.1 million to the settlements to be distributed to the victims. In exchange the parishes and entities could not be sued by victims. The committee, which is seeking a much larger contribution, had previously said parishes, who are separate corporations, “own significant excess real estate.“

Other Catholic entities include the Annual Catholic Appeal, Catholic Charities, several schools, cemeteries, the St. Vincent de Paul Place in Norwich and many others.

The committee’s plan states that if the parishes and entities do not agree to a “substantial and meaningful” contribution under its plan then the victims would be free to file lawsuits or continue with the ones they have filed. If a bankruptcy plan is approved the diocese and parishes would be protected from any lawsuits.

Past victims who have sued the diocese have received settlements in the $1 million range. Having to pay such large settlements could be devastating to individual parishes especially if the General Assembly passes a law that would allow victims of sexual assault of any age file a lawsuit. The statute of limitations now prohibits those over 48 from doing so. Of the 143 victims, 50 are barred from suing by the statute of limitations.

The diocese plan also calls for paying the older “time-barred” victims $2,500 each. The committee plan calls for them to receive an undetermined percentage of what younger victims would receive. Kindseth said the payments to the older victims under the committee’s plan would be far more than $2,500.

He added that payments to these victims must be far more than $2,500 in order for them to give up their rights to file a lawsuit against the diocese and parishes at some point.

The plan also calls for the diocese to transfer its insurance policies with Catholic Mutual that covers sexual abuse claims to the committee and let its trustee negotiate a settlement.

The diocese’s bankruptcy plan calls for a $5 million in insurance money to go to the victims. But the committee argues the Catholic Mutual Insurance policies call for $60 million of coverage and there is room to compromise and gain more money for the victims.

The committee said in its filing that its plan provides the means for settling and paying all claims against the diocese while allowing the diocese to emerge from bankruptcy, continue its mission and support its ministries.

Assets under the committee’s plan

While the amount of increased contributions from the insurance policy and Catholic entities would still have to be negotiated under the committee plan, it does spell out the sources of additional contributions from the diocese.

While the diocese plan calls for contributing $8.7 million from the sale of property, the committee plan almost doubles that to $16.8 million from the sale of 10 properties.

These include six properties in Norwich: vacant land at 7-9 on Bath St., an office at 11 Bath St., property at 7 Otis St., the diocesan Tribunal building at 17 Otis St., the diocesan school office at 25 Otis St. and a vacant office at 31 Perkins Avenue.

In addition, Xavier High School and Mercy High School in Middletown, St. Bernard School, and the Office of Campus Ministries in Willimantic would be sold.

Under the committee plan, the diocese gets to keep its Chancery Office and Bishop Michael Cote’s residence on Broadway in Norwich, the St. Vincent de Paul Building in Middletown and a building at 60 Jay St. in New London which houses Asociación de Dominicanos de New London.

The committee plan calls for the diocese to contribute $1.3 million cash, $300,000 more than what the diocese would contribute under its plan. The committee also calls for the diocese to contribute $7.7 million from money it is owed by the parishes and the Catholic entities. The diocese plan calls from contributing no money from these sources.

Finally, the committee and diocese plan calls for contributing $4.4 million owed by Mount Saint John Inc., the school where many of the abuse cases are alleged to have occurred.

What happens now

The committee and the diocese will spend the next 60 days working with newly-appointed mediator to try and reach agreement on a new plan.

If no agreement can be reached, the two competing plans would then be sent out to the victims and other creditors who would then vote to approve or reject each plan. The results would be tallied and presented to bankruptcy court Judge James Tancredi who would decide which plan to put in effect.

The diocese has said its plan is most equitable way to compensate victims while the committee is urging victims and creditors to accept its plan.

If the committee’s plan is approved, it includes a detailed system that would be used to assign a score to each victim’s abuse. That score would determine how much each victim would receive from the fund. Each victim would be able to submit a written statement about their abuse and how it has affected their life.

The diocese filed for bankruptcy in 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 residential school for troubled boys in Deep River, from 1990 to 2002. Since the bankruptcy filing, 83 additional people, whose sexual assault allegations involved not only the school, but diocesan churches, have filed claims in the bankruptcy case.

Since the diocese filed for bankruptcy, it has received seven extensions from Tancredi giving it the exclusive right to file a bankruptcy. It has unsuccessfully negotiated with its insurance company, parishes, the committee representing victims and creditors and other entities to agree to a plan and fund to compensate the victims.

Tancredi approved a motion by the committee last week to file its own competing plan.