Judge extends time for Norwich diocese to file bankruptcy plan
A federal bankruptcy judge on Tuesday extended the deadline for the Roman Catholic Diocese of Norwich to file a bankruptcy plan even though the attorney for the committee of people who say they were sexually assaulted by diocesan priests harshly criticized the fees that diocesan lawyers and financial experts have so far spent on the case.
During the nearly three-hour hearing, Judge James Tancredi, who in September had criticized the diocese for the money it was spending on legal and financial services fees, considered a motion by the diocese to extend its exclusive period for filing its Chapter 11 bankruptcy plan. It was set to expire Friday.
Diocese attorney Louis DeLucia said the size and complexity of the cases warranted an extension and rattled off a list of legal issues that have been addressed and resolved since the diocese declared bankruptcy in July.
"This is not easy stuff, your honor," he told Tancredi, adding it was the diocese's first request for an extension.
DeLucia said it was not factual to say the diocese's fees are exorbitant and unreasonable and said they are similar to those amassed by other dioceses in similar cases.
He said a lot of the work has been done upfront and predicted there would be a "dramatic cliff fall of fees" as the diocese approaches a deadline in about four months for victims to file claims.
But Eric Henzy, one of the attorneys for the claimants' committee, said the $1,150,000 the diocese spent in the 11-week period from July 15 to Sept. 30 cannot be justified, given the size of the case and what has been accomplished so far.
The diocese has racked up a total of more than $2.2 million in legal and financial services with Henzy estimating another $400,000 to $500,000 being spent since Sept. 30.
Henzy said the diocese's obligation is to preserve its assets by minimizing expenses and argued that the diocese is a small organization with a budget of $14.5 million a year. He told Tancredi that to get to this point in the case, the diocese should have spent about one-fourth to one-fifth of what it has on legal fees.
"We haven't even got to the complexities of this case yet," he said. "These numbers are so large that you can't escape the conclusion that either the debtor (the diocese) doesn't understand what is happening or doesn't care about what is happening."
Henzy added that the money to pay the fees can only come from assets that should go to the victims. The diocese's assets, which he termed a " fast melting ice cube," will be determined in the bankruptcy plan.
He also said his analysis of the similar cases cited by DeLucia shows the diocese is spending much more than its counterparts for the same kind of work.
But Tancredi said he was not ready to end the diocese's exclusive right to file a plan and begin accepting competing plans from other entities, such as the victims' committee. Mark Fisher, the attorney for Catholic Mutual, the diocese's insurer, told Tancredi that allowing competing plans to be submitted at this point would create chaos in the case.
Tancredi promised that he would not "let the victims' claims get washed away by professional fees" and said he has the ability to hold back fees if he does not see progress in the case.
He extended the diocese's exclusive period to file a plan until February and will hold a hearing shortly before that to review the progress of the case.
Diocese, victims resolve other issues
After opposition from the claimants committee to the diocese's original plan, DeLucia told Tancredi at the beginning of the hearing that the diocese has agreed to extend the deadline for victims to file claims, increase the scope of advertising about the claims process and removed a series of questions from the claim form that victims have to submit.
The diocese has now agreed to have a 120-day window from the date that a plan advertising the deadline, otherwise known as the bar date, is approved by Tancredi, for victims to file a claim. The diocese initially had suggested a 90-day window.
The claimants' committee also had opposed aspects of the claim form that alleged victims have to submit, including questions such as whether victims ever got married, what jobs they have had and whether they were ever sexually assaulted by anyone else. It says these are irrelevant to the victims' claims of sexual assault by diocesan employees and are designed to limit the diocese's exposure to damages. The committee states the questions also pose "the very real risk of discouraging survivors from submitting claims altogether."
DeLucia said the diocese has agreed to remove these questions from the form but said such questions may have to be asked later in the process to help determine the damages for each victim.
The diocese also agreed to expand the advertising of the bankruptcy and the deadline beyond area newspapers to the Providence Journal and the Four County Catholic, a diocesan publication, to be published in the bulletins for all 51 diocesan parishes and be offered in Spanish, as many Spanish-speaking boys attended Mount Saint John.
In July, the diocese filed for Chapter 11 bankruptcy in the face of more than 60 young men filing lawsuits in which they charge they were raped and sexually assaulted as boys by Christian Brothers and other staff at the diocese-run Mount Saint John Academy in Deep River from 1990 to 2002. Mount Saint John was a residential school for troubled boys whose board of directors was headed by retired Bishop of Norwich Daniel Reilly. Since then, additional people whose sexual assault allegations involved not only Mount Saint John but diocesan churches have filed claims.
The bankruptcy process, which freezes lawsuits against the diocese, will determine the assets of the diocese and how much each victim will receive in damages.
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