Archdiocese Moved Assets before Bankruptcy Filing
March 12, 2020
|FILE - In this Nov. 29, 2018, file photo, Archbishop John C. Wester, head of the Archdiocese of Santa Fe, tells reporters the diocese will be filing for Chapter 11 bankruptcy protection next week as clergy sex abuse claims have depleted its reserves. An attorney said Monday, March 10, 2020, he is considering challenging the Archdiocese of Santa Fe's movement of assets before it filed for bankruptcy amid allegations of clergy abuse. (AP Photo/Susan Montoya Bryan, File)|
ALBUQUERQUE, N.M. (AP) — A creditors committee of clergy abuse survivors believes the Archdiocese of Santa Fe moved assets to hinder creditors before it filed for bankruptcy protection, a lawyer said.
Attorney James Stang told a federal judge Monday that the committee may seek standing in the case to challenge the movement of assets, the Albuquerque Journal reports.
“The committee is ready to move forward on standing motions to avoid fraudulent conveyances that we believe occurred when the archdiocese corporately reorganized,” Stang said. “We believe there’s a basis for us bringing those fraudulent conveyance actions.”
The contention came as parties in the Chapter 11 case were in court updating a federal Bankruptcy Court judge on the status of mediation. Around 400 people have filed notices with U.S. Bankruptcy Court alleging they were harmed and are owed damages tied to abuse by priests and other clergy working in the archdiocese, which has acknowledged that abuse occurred.
In court filings, the committee says offers and counteroffers have been exchanged, but the archdiocese and creditors have not been able to reach an agreement on terms of a reorganization plan. A third mediation session is scheduled for next week.
The committee says one impediment has been a move by the archdiocese before filing for bankruptcy to incorporate all of its parishes and to transfer substantial property to a real estate trust of which the archdiocese and parishes are beneficiaries. A substantial amount of money was also moved into a trust, the panel says.
Ford Elsaesser, an attorney representing the archdiocese, said good faith mediation continues and he was hopeful litigation involving church assets could be avoided.
He declined to comment on the details of the negotiations.
Archbishop John C. Wester has said in the past that he decided to file for reorganization to ensure that all claims of child abuse survivors, including those who come forward in the future, can be settled “fairly and equitably.”
U.S. Bankruptcy Judge David Thuma acknowledged that negotiating such cases is difficult, but he said the alternative is not attractive.
“I think everybody appreciates that a full-blown litigated Chapter 11 is kind of a last choice of all parties,” he said. “It’s incredibly expensive, it takes forever, and it’s just not something that’s designed to provide a satisfactory solution to the abuse victims or the church or anybody else.”