Bankruptcy judge rules Twin Cities archdiocese not hiding assets

A U.S. Bankruptcy Court judge has rejected a request to consolidate the assets of the Archdiocese of St. Paul and Minneapolis, a blow to clergy sexual abuse victims who have filed claims in the court as creditors.

Creditors had argued that the archdiocese had taken steps to hide and shield assets including changing corporate documents, painting over cemetery signs, removing references to the archdiocese on the Catholic Cemeteries' website, and creating new foundations to divert revenue.

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In his decision, Judge Robert J. Kressel said creditors had failed to provide sufficient facts to support the motion to consolidate.

"There is no doubt that the Catholic Church is hierarchical in its organization and authoritarian in doctrinal matters," Kressel wrote. "But those characteristics are insufficient for a court to ignore its corporate legal structure. The typical substantive consolidation is reserved for situations where the finances of two or more debtors are so confusingly intertwined that it is impossible to separate them."

Jeff Anderson, an attorney representing the creditors group, said the amount available without assets from parishes, schools and other entities is substantially smaller.

"For the moment the estate that is available to the survivors, the archdiocese claims is $14 million, when our information and that before the court, shows that is closer to $1.7 billion" including the disputed assets, he said.

Anderson said creditors will appeal the decision to a federal district court, likely sometime within the next week.

In a statement, Archbishop Bernard Hebda said he's pleased with the decision.

"The Archdiocese has fully and appropriately disclosed its assets," Hebda said. "Further litigation could needlessly prolong the process and take away funds from claimants."

"The Archdiocese nonetheless continues to stand ready to work with counsel for sexual abuse claimants to provide fair compensation as part of our Plan of Reorganization," he added.