Archdiocese creditors seek higher payout in bankruptcy plan

Updated: 5 p.m. | Posted: 11:53 a.m.

The committee representing sex abuse victims and other creditors in the bankruptcy of the Archdiocese of St. Paul and Minneapolis is proposing the church raise more money for victims by mortgaging the Cathedral of St. Paul and land leased to three Catholic high schools.

That move is part of an archdiocese reorganization plan filed by the committee late Monday. It says the archdiocese has far more resources to compensate abuse victims than the church has reported.

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The church plan filed in May called for the archdiocese to provide about $13 million out of its own pocket. That was part of a $65 million proposed reorganization plan that included contributions from insurers, parishes, schools and other Catholic organizations.

But the creditors' committee insists the archdiocese can come up with $80 million, with additional contributions coming from insurers and other parties that could raise the total available to creditors above $100 million.

"The archdiocese ability to pay is way beyond what the archbishop has represented it to be," said abuse victim attorney Jeff Anderson. "They can afford at least four times what they have proposed in their contributions. No question about it. They have a much greater ability to handle that without undue hardship."

The committee representing abuse victims and other creditors says the church could raise $33 million by mortgaging the cathedral and property the archdiocese leased to the Benilde-Saint Margaret, De La Salle and Totino Grace high schools.

The committee also hopes to seek compensation for victims from local Catholic foundations, parishes and other organizations that have an estimated $1.4 billion in assets. The committee contends those organizations are sheltering archdiocese assets.

The plan also calls for the church to stop support payments to former priests credibly accused of sexual abuse and shift that money to abuse victims.

The judge overseeing the bankruptcy has denied a committee motion to tap those organizations for money. But the committee is appealing the judge's order.

The creditors plan goes beyond the issue financial compensation, seeking the release of an internal investigation into allegations of sexual harassment by former Twin Cities Archbishop John Nienstedt, as well as communications between the archdiocese and the Vatican embassy.

Those requests are unusual for a bankruptcy proceeding, according to Charles Reid, a University of St. Thomas law professor.

"It is not the kind of relief that bankruptcy courts are in the custom and practice of granting. But who knows? This is a different kind of case," Reid said.

Archbishop Bernard Hebda issued a statement this afternoon, saying the church is endeavoring to negotiate in good faith and its goal is a fair and just resolution for all.

The judge overseeing the bankruptcy will hold a hearing on the competing reorganization plans in mid December.