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    Sunday, October 20, 2019-7:06:32A.M.






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Guam church bankruptcy: Liabilities $45M

HAGÅTÑA (The Guam Daily Post) — In the face of  sexual abuse lawsuits claiming millions of dollars in damages, the Archdiocese of Agana on Wednesday morning filed a petition for reorganization in the District Court of Guam under Chapter 11 of the U.S. bankruptcy code.

Chapter 11 will allow the archdiocese time to reorganize and sell some of its assets to pay claimants and creditors, enabling the archdiocese to keep its churches and schools open and serving the Catholic faithful.

In its filing, the archdiocese lists $22.9 million in assets and $45.6 million in liabilities.

The liability figure is expected to increase substantially.

There are 202 sex abuse lawsuits and each claimant is seeking $5 million on average in damages. Multiply that by 202, and the potential liability could be in the neighborhood of $1 billion.

The liability figure “can only be an estimate,” the archdiocese's bankruptcy attorney, Ford Elsaesser, said during a news conference Wednesday morning at the archdiocese chancery in Hagåtña.

In order to meet the requirements of filing, 19 of the 202 abuse claims are cited as liabilities in the bankruptcy petition. The amount of each “unsecured” claim is listed as $100,000.

“When it comes to the abuse claimants number, we’re not saying that’s a hard and fast value of those claims," Elsaesser said. "They obviously could be more valuable than that.”

There have been only 14 confirmed settlements following the mediation that took place in September 2018. The mediation effort is aimed at avoiding a trial, which could result in substantially higher damage awards.

“There should be no interruptions of any schools or parish operations going forward,” Elsaesser said.

Archbishop Michael Byrnes said the archdiocese's motivation for filing for Chapter 11 bankruptcy “has been, and still is, our desire to bring the greatest measure of justice and consolation to those who suffered at the hands of clergy.”

“We take responsibility for the sins of the past," Byrnes said. "We hope that we bring some amount of justice to these victims.”

Elsaesser described a three-step process to the bankruptcy proceedings.

1. Cap the liability

Over the next six months, during the first phase of the reorganization, “broad notice” will be provided to anyone else who may have a claim against the archdiocese but has yet to file.

“They will have an opportunity to file up until a deadline date,” which will probably bet set for May or June, Elsaesser said.

That deadline will be set by the court and will cap the liability for the archdiocese, barring any further claims after the deadline has passed.

“To help fund the reorganization and compensation to the abuse survivors,” Elsaesser said, he will be working with the plaintiffs’ attorneys to try to get the best possible price on the sale of the church’s nonessential properties.

Among the properties owned by the archdiocese now listed for sale is the former Accion Hotel in Yona, which was turned into the Redemptoris Mater Seminary by the Neocatechumenal Way. Byrnes ousted the Way and closed the seminary in January 2018.

The Accion has been listed for sale since August 2018 for $7.5 million.

Also on the chopping block are the archdiocese-owned Civille & Tang PLLC building in Hagåtña and the historic Archbishop Flores house.

Elsaesser said the U.S. Trustee Office will appoint a committee made up of plaintiffs' attorneys, who will be able to hire their own bankruptcy counsel.

2. Mediation again

After the deadline for any remaining complaints to be filed, the archdiocese “will go as soon as possible into mediation with our insurers, with the abuse claimants and their legal representatives,” Elsaesser said.

The hope is that, during that mediation process, an overall settlement can be crafted to compensate all of the victims.

“The settlement will be one number,” Elsaesser said, “and that number will be the dollar amount — the ‘pot,’ so to speak — that will be the funds that will be distributed to the claimants.”

3. Reorganization plan

Once an overall settlement is achieved, Elsaesser said, the third and final step is to incorporate that settlement into a Chapter 11 reorganization plan.

Elsaesser said acceptance of the plan “is a democratic process in which the actual abuse claimants will be voting on whether to confirm that plan.”

If the plan is accepted and approved by the bankruptcy court, “that is when the compensation would be distributed to the claimants,” Elsaesser said.

“We hope that we’ll be able to get to that point within a year – if that’s possible,” he said.