Sexual Abuse Survivor Group Rejects Archdiocese’s Chapter 11 Bankruptcy Plan

The Archdiocese of Saint Paul and Minneapolis has filed for Chapter 11 bankruptcy and submitted a reorganization plan after facing multiple sexual abuse allegations. In a reorganization plan, the filing party’s creditors can make comments about the proposed plan and either accept or reject the plan’s terms. Whether these are incorporated into the final approved plan or not is at the discretion of the bankruptcy court overseeing the case.

In the case of the Archdiocese’s bankruptcy, a group of survivors of the alleged acts of abuse have rejected the current plan and its proposed way to compensate them. The current proposed plan is for the Archdiocese to pay $13 million to the victims. The victim group proposed a new plan that involves the Archdiocese paying them $80 million out of its own pocket. They claim that the Archdiocese negotiated its claim exposure value with its insurers without them and that the true value of its claim exposure is higher than its stated $114 million.

Nonprofit Organizations can File for Bankruptcy

You might be surprised to learn that nonprofit organizations can file for bankruptcy. Although bankruptcy is often associated with companies that cannot turn enough of a profit to repay their debts, nonprofit organizations like churches and community groups also have this option. Like companies that file for Chapter 11 bankruptcy, nonprofit organizations can use Chapter 11 as a way to reorganize their operations to repay debts under organized plans. With a nonprofit, bankruptcy can be a way to avoid an interruption to the service it provides its community.

Reorganization Involves More than Repayment

Although repaying outstanding debts is often the primary goal of a Chapter 11 case, it is not the only goal a filing party hopes to achieve. Chapter 11 bankruptcy is known as reorganization bankruptcy because it involves a reorganization to how the filing party operates. This can mean removing certain individuals from their positions and either installing new individuals to those positions or eliminating those positions altogether. It can also involve the creation of new oversight systems and different checks and balances. Ultimately, the goal of reorganization is to avoid creating the atmosphere that led to financial difficulties in the first place.

The Archdiocese of St. Paul and Minneapolis noted in its announcement of the bankruptcy that its parishes and Catholic schools are incorporated separately from the Archdiocese and will not be involved in the reorganization.

Work with an Experienced Elk Grove Bankruptcy Lawyer

If you are considering filing for bankruptcy, take the time to learn about all aspects of the bankruptcy process with an experienced bankruptcy lawyer before you move forward. This way, you can learn about all of your rights and legal options, some of which you might not have considered before. Contact our team of experienced bankruptcy attorneys at Newland & Newland, LLP today to set up your initial consultation in our office. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.

(image courtesy of Daniel Tsen)

  • Newland & Newland LLP, Attorneys, Arlington Heights, IL
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