Diocese bankruptcy filings shows its spent almost $1 million on attorneys in 4 months

Sun, August 15, 2021
Aug. 15—NORWICH — Over the past four months the Diocese of Norwich has spent nearly $1 million on attorneys' fees relating to its recent bankruptcy filing.

In addition, the diocese placed its assets such as cash, investments, cars and accounts receivable at $21.2 million but has not determined the current value of the 14 properties it owns. It lists its current liabilities at $2.9 million but that does not include the more than 60 lawsuits by men who say they were raped and sexually assaulted as boys by Christian Brothers and other staff at the diocese-run Mount Saint John Academy in Deep River.

These are just a few of the revelations from the diocese's recent filings in its bankruptcy case. The judge in the case has granted a motion by the diocese to delay a hearing on orders in the bankruptcy process, initially scheduled for Tuesday, until Sept. 9

New London attorney Kelly Reardon, whose firm has won millions of dollars in settlements for victims of sex assault by diocese priests, and represents some of the Mount Saint John victims, said last month that the more of the assets that go toward attorneys' fees and bankruptcy cost, the less there is for the victims.

On Friday, she called the diocese's expenditure of $954,000 on legal fees since April 1 as "outrageous."

"I'm just floored about the legal fees," she said.

In a video that accompanied the original bankruptcy announcement on July 15, Bishop Michael Cote said the diocese only declared bankruptcy "after two years of careful deliberation and prayer."

Reardon said she now wonders how much in legal fees the diocese spent during that period.

Gail Howard, one of the co-leaders of the Connecticut chapter of the Survivors Network of those Abused by Priests, asked Friday how those legal fees help the victims. "It's protecting the diocese and not caring for the least of our brothers," she said.

The diocese declined Friday to make a representative available to answer questions about the filings, saying they speak for themselves.

Mount Saint John was a residential school for troubled boys, where the late Christian Brother K. Paul McGlade and others are accused of sexually assaulting a large number of boys from 1990 to 2002. The school's board of directors was headed by retired Bishop of Norwich Daniel Reilly.

Cote has said the bankruptcy and reorganization are "the most equitable way" to resolve the lawsuits filed by men who allege they were abused while attending the school as youths. The number of lawsuits is expected to increase during an upcoming window to file claims.

Cote has said the "Chapter 11 bankruptcy will allow the Court to centralize these lawsuits, as well as help the Diocese manage its litigation expenses and preserve adequate financial resources for all essential ministries."

In its initial bankruptcy filing, the diocese estimated its assets at $10 million to $50 million but its liabilities at $50 million to $100 million. In past years, settlements paid to individual victims who sued the diocese averaged about $1 million each.

Diocese attorney Louis DeLucia has said that "one of the purposes of the bankruptcy is to make sure that all legitimate claimants get their fair share of available funds in the settlement pool, otherwise the first plaintiff to get a judgment and execute on it could potentially collect most of the assets, leaving nothing for other claimants. The Bankruptcy is in fact the only way to ensure fair and equitable distribution to all claimants."

A committee made up of five victims has been assembled to protect the interests of all the victims and has hired the Bridgeport law firm of Zeisler and Zeisler. The firm could not be reached for comment Friday. The diocese will work with the creditors' committee to determine its assets and how they will be allocated to each victim. The eventual settlement will be approved by the bankruptcy judge.

What are the properties worth?

The filings list 14 properties owned by the diocese but states their value is undetermined. These include Saint Bernard High School in Montville, Mercy and Xavier high schools in Middletown as well as the chancery and bishop's residence in Norwich. The Cathedral of St. Patrick in Norwich is not listed as an asset.

Among its other assets, the diocese lists that it has claims against the Christian Brothers organization for being partially liable for the sexual assaults at Mount Saint John, as well as about one-third of a $1.1 million settlement that it paid to a woman who said she was sexually assaulted by the late Rev. Thomas Shea. The diocese sued its insurer, Travelers, in 2017, saying it should fund a portion of that settlement. The case is pending. The filing also shows the diocese is owed $1.3 million by the separate corporation that owns Mount Saint John.

Among the diocese's liabilities are large sums it states it owes to parishes and cemetery associations. These include $394,936 to St. John Church in Montville, $471,853 to St. Mary Cemetery Corp. in New London, $184,137 to St. Patrick Cemetery in Uncasville, $96,091 to St. Joseph Church in New London and $795,574 to St. Mary's and St. Joseph's Cemetery Corp. in Norwich.

It is unclear why the diocese owes this money to these groups, which are separate business entities from the diocese. Reardon said she has questions about these liabilities, which could diminish the payments made to victims.

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