Tuesday, March 22, 2016

Diocese of Gallup Files Chapter 11 Reorganization Plan

As previously reported, in late 2013 the Catholic Diocese of Gallup, which encompasses parts of New Mexico and Arizona, filed for Chapter 11 bankruptcy reorganization in order to deal with mounting sex abuse claims against the diocese.  Yesterday the Diocese finally filed its proposed Plan of Reorganization. (Full text of Disclosure Statement describing the Plan.)  The Disclosure Statement begins by admitting:
It is impossible to overstate the tragedy of the Abuse that was inflicted on the children and teenagers of the Diocese. Such Abuse was perpetrated by priests or others purporting to do the missionary work of the Roman Catholic Church. Instead of fulfilling their missions, such perpetrators inflicted harm and suffering on the children and teenagers of the Diocese. Much of this harm was inflicted at a time when the Debtors did not have insurance that covered such claims, or had insurance with an insurer that is now insolvent. 
The Plan, which must receive judicial approval and then be voted on by creditors, ultimately was the product of court-ordered mediation. As reported by the Wall Street Journal:
The plan relies on at least $22 million to repay victims as well as lawyers and other creditors. Of that amount, $11.55 million would come from a settlement in which diocesan insurer Catholic Mutual will buy back its policies. The diocese itself is slated to contribute just over $3 million to the plan....
Other insurance carriers, the Diocese of Phoenix, some of the Diocese of Gallup’s parishes, two Franciscan religious orders and two foundations that support the diocese will also contribute to the restructuring plan....