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Q&A

On January 4, 2011, the Archdiocese of Milwaukee filed a petition to reorganize its financial affairs under Chapter 11 of the U.S. Bankruptcy Code. The following are questions and answers about the proceeding. If you have additional questions, please e-mail reorg@archmil.org.

Chapter 11 Q&A (April 1, 2011)


Topics

Chapter 11 Reorganization    
     

Q1. Where was the bankruptcy filed? What judge was assigned?

   

A1. The bankruptcy petition was filed in U.S. Bankruptcy Court for the Eastern District of Wisconsin.  The bankruptcy courts are located in the federal courthouse in downtown Milwaukee. The case was assigned to Bankruptcy Judge Susan V. Kelley.

   

Q2. Isn’t bankruptcy just a way to protect assets and not give people what they deserve?

   

A2. The archdiocese has liquidated most available assets not currently in use for education, charitable or other ministry, to provide financial and psychological support to victims/survivors and cover related costs.

Over the past 20 years, we have spent more than $29 million to cover costs associated with this tragedy.  Since 2002, we have sold property, liquidated savings and investments, eliminated ministries and services, cut archdiocesan staff by nearly 40 percent, and put available real estate on the market in order to free up resources. As a result, we have succeeded in reaching mediated settlements with nearly 200 individuals.

On June 30, 2010 -- the end of our most recent fiscal year – we had total assets of $98.4 million.  The large majority of those assets – more than $90 million -- are monies that do not belong to the archdiocese, are restricted by donors for designated purposes, or are offset by corresponding liabilities. As an example, assets committed to Catholic Cemeteries account for $62.6 million of the Total Assets.  The majority of those assets -- $48.7 million -- are in the Perpetual Care Trust.  This trust is not owned by the Archdiocese of Milwaukee. It was established for the perpetual care of cemetery graves and crypts.  A designated portion of each grave/crypt sale is put into the trust to ensure maintenance and care is provided forever.  So while these assets show up on our balance sheet, they are not funds that we are entitled to use for victim/survivor compensation or any other alternative purpose. The same is true of most of the other assets listed in our financial statements.

   

Q3. Where is all the operating money coming from if all the donations are restricted?

   

A3. Archdiocesan operating funds come mainly from three sources: the Catholic Stewardship Appeal; parish assessments; and the ongoing operation of Catholic cemeteries. The three largest uses of funds are salaries and benefits, grants given to support Catholic activities, and programming initiatives.  Catholic Stewardship Appeal contributions are solicited and spent for designated ministries and services that are included in our operating budget.

   

Q4. Is there a deadline for filing claims against the archdiocese?

   

A4. The deadline for filing claims is called a “bar date.” The bar date for this bankruptcy has not been set. Once the bankruptcy judge establishes the bar date, it will be widely advertised in an effort to ensure all creditors have the opportunity to share in the archdiocese’s available assets. After the bar date has passed, no more claims may be filed. 

   

Q5. When will the archdiocese come out of bankruptcy and what happens then?

   

A5. Judging from the diocesan bankruptcies that preceded ours, we expect to emerge from Chapter 11 reorganization in 12 to 24 months. The goal in a Chapter 11 reorganization is to compensate creditors as fully as possible, while leaving the organization with enough resources to continue operating.  We expect to be a smaller, but still functioning organization poised for new growth and a vibrant future.

   
     

Response to Allegations of Abuse
   
     

Q6. Who is responsible for moving priests from one assignment to another?

   

A6. The Office of Ordained and Lay Ecclesial Ministry oversees the assignment of priests to parishes. Under normal circumstances, the Priest Placement Board, which is made up of eight priests and facilitated by the archdiocese’s director of personnel services, makes recommendations that are based on priests’ strengths and interests, interviews with parish lay leaders, and any other relevant considerations.

   

Q7. What happens to priests who are accused of sexually abusing minors?

   

A7. If an allegation of sexual abuse is made against a priest, he is placed on leave until the allegation has been investigated by civil authorities or, if civil authorities decline to investigate, by a private, independent investigator hired by the archdiocese.  

If an allegation is found to be credible, the priest is restricted from all priestly ministries and may not celebrate the sacraments publicly or present himself as a priest in any way.  His name is added to the list of restricted diocesan priests on the archdiocesan website.

If an allegation is not substantiated, a decree of exoneration is issued and the priest is returned to the parish or other assignment from which he was moved.
    
More detailed information about this process is available here.

   

Q8. What about the bishops’ role in reassigning offending priests?

   

A8. We can never forget the pain caused by priest-perpetrators who abused minors.  We must acknowledge that bishops also made mistakes.  With the knowledge we have today, it is easy to criticize decisions made in the past.  The Church knows so much more today than it did 50, 40, 30 or even 20 years ago, when perpetrators were treated with therapy and counseling with the goal of returning them to ministry.  In some cases, this happened and no other abuse was ever reported.  

Archbishop Listecki has stated that, although he believes no bishop would intentionally place a child in harm’s way for the sake of returning someone to ministry, we know that in some cases, the decisions to do so tragically resulted in further abuse.  That is why, since the adoption of the Charter in 2002, no priest with a substantiated allegation of sexual abuse of a minor can ever serve in public ministry in the Archdiocese of Milwaukee -- and none is.

   

Q9. Why didn’t you have better policies in place years ago? Why did you move priests who had been credibly accused of abusing minors into new assignments where they could re-offend?

   

A9. When this issue first began to surface forty years ago, the consensus view among professionals was that sexual abuse was a moral failing. The response was to treat this failing with intense retreat, prayer, spiritual direction, a penitential approach and sometimes psychological counseling.  Church leaders and the experts they consulted -- including doctors, psychologists, and therapists -- thought counseling could “cure” a pedophile.  Placing a priest in a new assignment was often part of the treatment plan.  

With the establishment of Project Benjamin in 1989, the archdiocese began to adopt a more informed and consistent protocol for responding to allegations of clergy abuse of minors. The project brought together victims’ advocates, healthcare professionals, judicial and law enforcement representatives, clinical social workers and therapists to offer recommendations on policies and procedures and to assist in the Church’s response to victims/survivors.

Usually that response consisted of immediate removal or leave from the current pastoral assignment; prohibition of any ministry; removal of priestly faculties; spiritual direction and/or counseling; and clinical therapy.  With the recommendations of therapists, medical professionals and sometimes civil authorities, another pastoral assignment could only be considered and sometimes given according to a set of determined criteria, including professional assessment of risk.  Monitoring protocols began to be put in place, regardless of whether or not an assignment was given.

In the 1990s, imposing partial or full restrictions on ministry for priests with past incidents of sexual abuse of a minor became more of the standard practice.  At the onset of 2002, the Archdiocese of Milwaukee had six priests in active ministry who were the subjects of past allegations of sexual abuse of a minor.  

In June of 2002, the U.S. Bishops adopted the Charter for the Protection of Children and Young People.  The Charter adopted a “one strike” policy with regard to priests serving in any active, public ministry, calling for the following:
     •    Permanent removal from active ministry of any priest with a substantiated allegation of sexual abuse of a minor;
     •    Criminal background checks for adults, including clergy (and bishops), who work with children and youth;
     •    Implementation of educational programs for the prevention of child sexual abuse for both adults and children;
     •    Behavioral guidelines/ethical standards for ministry;
     •    Outreach for victims/survivors;
     •    Review boards to oversee policy implementation and to assess allegations of abuse and make recommendations about fitness for ministry.

Based upon the Charter, the six priests in active ministry were publicly identified and removed from ministry. Since then, no priest against whom credible allegations have been made has been allowed to function or even appear publicly as a priest.  

Dr. Monica Applewhite, one of the world’s leading authorities on the dynamics and prevention of sexual abuse, notes: “In examining allegations of sexual abuse and how they were handled in the past, there is a temptation to apply our current standards and knowledge to judge decisions and actions that were taken long ago.”  Certainly, given what we know today about pedophilia and the long-term damage resulting from sexual abuse, it’s easy to see Church leaders made many mistakes in their handling of this issue.  While this will always be a source of remorse, it is also important to state that we have learned from our mistakes and now can claim one of the world’s most rigorous systems for the prevention, deterrence and detection of sexual abuse of minors.

   

Q10. Why is Archbishop Weakland’s name still on the cathedral?

   

A10. The Archbishop Weakland Center houses the parish offices of St. John the Evangelist Cathedral.   Formerly part of the cathedral high school, the space was repurposed during a major renovation completed in 2002. Parish leaders overseeing the renovation chose to name the office complex for Archbishop Weakland.  The name of the office is a parish decision and we understand the parish will consider both sides of this issue in making a future decision about the name of the center.

   

Q11. Can we stand in front of God and say justice has been done?

   

A11. Ministering in the Church, we are reminded more often than most that every decision we make must reflect and reinforce our Catholic values.  It’s probably safe to say none of us wants to put our immortal souls at risk by treating victims/survivors unjustly.   As we have come to fully grasp the breadth and depth of the damage inflicted by clergy sexual abuse of minors, we have greatly increased our efforts to give victims/survivors the support and closure they need and have implemented policies and initiatives to prevent this tragedy from reoccurring.
 
While we desire to do as much as we can to help victims/survivors recover, we also have an obligation to carry on the other work of the Church. We do our best to meet both goals, knowing God will be the ultimate judge of our actions.

   


   
Priest-Perpetrators    

 

   

Q12. Why weren’t more priests who abused minors thrown in jail?

   

 A12. Some perpetrators were prosecuted and some served time in  jail.  We know today that often times it would take victims/survivors decades to report a crime of sexual abuse.  That’s why in 2003, the archdiocese supported legislation to extend the statutes of limitations for criminal prosecution of offenders.  

Today, regardless of when the offense occurred, all allegations involving a priest who is still alive are immediately reported to the District Attorney’s office so a criminal investigation can be conducted as appropriate.

Even if a criminal prosecution is not possible, an independent Church investigation makes a determination if an allegation is substantiated and no priest with a substantiated allegation of sexual abuse of a minor can serve in public ministry in the Archdiocese of Milwaukee – and none is.

   

Q13. Is the archdiocese concealing documents that might reveal more priest-perpetrators?

   

 A13. No.  The archdiocese has twice brought in independent professionals to review personnel files to ensure that all reported offenders have been identified, prosecuted, if legally possible; and restricted from ministry.   

In 2002, civil authorities reviewed archdiocesan files to verify that there were no prosecutable criminal cases falling within the criminal statute of limitations.  In 2004, Archbishop Timothy M. Dolan directed a complete review of diocesan clergy files by an outside forensic audit team to make sure no allegations of clergy sexual abuse of a minor went undiscovered or unreported.

In the early 1990s, retired Milwaukee Judge Leander Foley led a review of all known priest-offender files to determine if any cases fell within the criminal statute of limitations and should be referred to civil authorities or, if a criminal referral was not possible, to ensure appropriate action had been taken to prevent further offenses.

Critics of the archdiocese have said they will not be satisfied until their own representatives can examine priest personnel files. Like every other responsible employer, we treat all personnel files as personal and confidential.  Reviews of our files already have taken place by qualified, credible, independent third parties, demonstrating our good faith commitment to ensure all existing documentation relating to clergy sexual abuse of minors has been appropriately reviewed and acted upon.

   

Q14. Why don’t you release the names of all the priests employed by the archdiocese who have been accused of abusing minors?

   

A14. In 2004, Archbishop Dolan published the names of all known diocesan priests, living and deceased, with substantiated allegations of sexual abuse of minors.  Read the list posted on the archdiocesan website.

   

Q15. Are priest-perpetrators still receiving financial support from the archdiocese?

   

A15. No.

   

Q16. I thought that the Archdiocese of Milwaukee had publicized the names of all priests with substantiated allegations of sexual abuse.  Why do I keep hearing news reports about religious order priests?

   

A16. No priest – whether a diocesan priest or a religious order priest – can ever publicly function as a priest in the Archdiocese of Milwaukee if they have a substantiated allegation of sexual abuse of a minor.  Religious order priests are subject to the same standards upheld in the Charter for the Protection of Children and Young People.  When a religious order priest requests faculties to minister publicly within the Archdiocese of Milwaukee, that priest’s superior is required to provide the following information from the leadership of their religious order:  
     •    A copy of the religious order's policy on its response to sexual abuse;
     •    Written documentation that no substantiated reports of sexual abuse of a minor exist.

The Archdiocese of Milwaukee has published the names of all diocesan priests with substantiated allegations on the archdiocesan website since 2004, and encouraged religious orders to do the same.  Religious orders function separately from the archdiocese and are under the supervision and authority of their own leadership, so the archdiocese cannot force them to publish this information. 

   

Q17. Why did the archdiocese oppose legislation to retroactively remove the statute of limitations to allow for the filing of civil lawsuits (the  so-called “window” legislation)?

   

A17. Proposed legislation would have eliminated the statute of limitations for future victims of child sex abuse and would have opened a three-year window for past victims (whose injuries fall outside the statute of limitations) to file lawsuits against the archdiocese.

We understand the pain and anger felt by victims/survivors who are denied the opportunity for justice through the legal system because the statute of limitations has expired. We supported an earlier law, Wisconsin Act 279 passed in 2003, which extended the criminal statutes of limitations for victims/survivors to hold perpetrators accountable.   

In addition, to provide an opportunity for healing for all victims/survivors regardless of when they were abused, the independent mediation process that we established in 2004 has no limitations with respect to the timing of an offense.

We opposed retroactively removing statutes of limitations because:
     •    Doing so would entirely eliminate the statute of limitations, an action unprecedented in Wisconsin civil law, subjecting all private organizations to an unending threat of liability, potentially forcing them to engage in litigation long after witnesses from the time period are gone, records are gone, and other pertinent information is unavailable.
     •    It would have unfairly discriminated against private institutions and victims of abuse by public employees, since it left in place the $50,000 liability limit for abuse by public sector employers.
     •    It would have subjected thousands of private and not-for-profit organizations to the very real possibility of bankruptcy, without exacting justice from the perpetrators themselves. Even if organizations were to eventually win a lawsuit alleging a decades-old offense, the cost of defending such a lawsuit would push many churches, charitable organizations, service clubs, etc., into insolvency. Meanwhile, the offenders involved in these old cases are either deceased or lacking the financial resources to be viable targets of civil lawsuits.

   
     

Abuse Prevention

   
     


Q18. What has been done to make sure children are safe in the future?

   

A18. No priest against whom an allegation of sexual abuse of a minor has been substantiated is allowed to ever again function or even appear publicly as a priest again.

To put a more extensive safety net in place, we have adopted every policy and practice outlined in the Charter for the Protection of Children and Young People. Created by the U.S. Conference of Catholic Bishops in 2002, the charter has been cited as the most rigorous set of policies and practices ever adopted by any organization to protect children from sexual abuse.  

The centerpiece of our abuse prevention program is the Safeguarding All God’s Family program.  Among other features, this program requires criminal background checks and a mandatory three-hour education program for all bishops, priests, parish directors, deacons, directors of religious education, directors of youth ministry, school and parish staff, catechists, group leaders, chaperones for field trips and overnight activities, coaches, and other adult volunteers who have regular contact with children or youth (including any individual who works, volunteers, or has contact with minors more than once a year; or who goes on an outing away from the parish with minors even once a year). The same individuals also must agree, in writing, to make a formal report if, while serving in any of these capacities, they observe behavior that could signal an abusive situation.

   
     
Impact on Financial Contributions    
     

Q19. Could my contributions to the Faith In Our Future Trust be used to cover costs resulting from the clergy sex abuse scandal?

   

A19.  No.  These contributions were made to the Faith In Our Future Trust, which is a 501c3 charitable trust created to support Catholic education and faith formation in southeastern Wisconsin. The trust is a separate legal entity, is not part of the Archdiocese of Milwaukee and is not subject to claims against the archdiocese. The terms of the trust restrict the trustees (a majority of whom are lay people) from using trust assets for purposes other than the Catholic education and faith formation initiatives outlined in the Faith In Our Future campaign.

   

Q20. Could the money I give to my parish be used to cover costs resulting from the clergy sex abuse scandal?

   

A20. All parishes within our archdiocese are separately incorporated legal entities under Wisconsin state law. This means they are not legally liable for financial obligations incurred by the Archdiocese of Milwaukee. However, for decades parishes have provided funding to cover archdiocesan operating costs through an annual assessment equal to roughly four percent of a parish’s annual revenue.  Funds from this source are used for general archdiocesan operations and may be used to help cover these costs.

   

Q21. Could my contribution to the 2011 Catholic Stewardship Appeal be used to cover costs resulting from the clergy sex abuse scandal?

   

A21. No.  All contributions will be used solely for the restricted purposes of the 2011 Catholic Stewardship Appeal and for no other purposes and will be deposited into a segregated trust account established to receive your gift.

The money raised by the Catholic Stewardship Appeal funds ministries that are part of our basic “business” -- serving families, strengthening parishes, supporting Catholic schools, and forming priests and parish leaders within the Archdiocese of Milwaukee. Given the depletion of our resources in recent years as a result of the lawsuits and settlements related to clergy sexual abuse, CSA contributions are essential to the continued operation of these ministries.

   

Q22. How much money contributed by “the people in the pews,” meaning all of us ordinary Catholics, has been used so far to settle sex abuse cases?

   

A22. In the past, expenses related to clergy sexual abuse have been paid for by the sale of property, investment income and from insurance reimbursements.  As archdiocesan resources have shrunk, monies from parish assessments were used to assist with legal fees, safe environment programming and the operation of the independent mediation system.  In some way, every Catholic has paid something, whether it is monetarily or through the reduction of services available to parishes, schools and others who rely upon the archdiocese for support.

   
     
Impact on Parishes    
     

Q23. Will parishes be affected by this bankruptcy? Are contributions to the parish at risk of being seized?

   

A23. Parishes have been affected by the drastic reduction in services provided by the archdiocese as it has shifted resources toward victim/survivor compensation and other costs arising from clergy sexual abuse of minors.  All parishes within our archdiocese are separate civil corporations under Wisconsin state law. This means they are not legally liable for financial obligations incurred by the archdiocese and thus have no direct exposure in this bankruptcy.

   

Q24. What happens to parish assessment payments?

   

A24. Parish assessments are a major portion or the archdiocesan budget and are vital to the continued viability of the archdiocese. They will continue to be assessed and used for archdiocesan day-to-day operations.

   

Q25. How will this bankruptcy affect parishes that owe the archdiocese money for current or past due parish assessments?

   

A25. Money owed to the archdiocese is shown as an asset on our financial statements. The archdiocese has always worked with parishes that experience their own financial struggles, usually by entering into a payment plan that allows the parishes to pay what they can over a period of time.

   

Q26. At what point do parishioners’ donations stop going toward these claims related to clergy sexual abuse of minors?

   

A26. The purpose of filing for Chapter 11 reorganization is to gain relief from claims that exceed a debtor’s ability to pay. This bankruptcy essentially serves as a “last call” for claims against the archdiocese so that, when we emerge from Chapter 11, we can make a fresh start.

   
     
Impact on Catholic Schools    
     

Q27. How will this affect funding for Catholic schools?

   

A27. Catholic schools are part of the parish corporation or are separate civil corporations. This means they are not legally liable for financial obligations incurred by the archdiocese.  Catholic schools are not dependent on the archdiocese for funding, so the reorganization has no direct financial impact on their operation.  Schools are ministries of the parish(es) that provide support.

Through the Office for Schools, the archdiocese provides important support to our Catholic elementary and secondary schools throughout southeastern Wisconsin. It disseminates best practices, provides shared marketing materials and strategies, conducts accreditation reviews, and offers consulting support on a wide range of issues. 

   

Q28. What about the archdiocesan high schools?

   

A28. The archdiocesan high schools are all separate civil corporations with their own boards of directors. Several of these schools have long-term land leases with the archdiocese which we expect will be unaffected.

   
     
Impact on Archdiocesan Services and Staff    
     

Q29. How will the services the archdiocese provides be affected? Will there be budget and staff reductions?

   

A29.  Services have already been steadily cut since 2002, to free up funds for victim/survivor compensation and other costs deriving from clergy sexual abuse of minors.  Services are delivered by people and there are far fewer of them working for the archdiocese these days – almost 40 percent fewer than 10 years ago.

Having spent the past decade eliminating programs and staff, today we are providing only services that we believe are essential to the continued viability of our local Church -- services such as priest, deacon and lay leader formation; accreditation of Catholic schools; and guidance and support for parishes that, from a practical or canonical standpoint, they could not provide for themselves.

The archdiocese intends to file a plan of reorganization that will allow it to continue providing these essential ministries and services.

   

Q30. What does the archdiocese consider an essential service and how much is being spent on these in total?

   

A30. Year-by-year, as we have shifted resources away from services to cover costs deriving from clergy sexual abuse of minors, we have narrowed our definition of “essential” and withdrawn from offering worthwhile, but not vital services. Today we define essential services by evaluating the likely long-term impact that the absence of the service would have on the faithful Catholics of southeastern Wisconsin. 

Setting aside operations that pay for themselves, such as the Catholic Cemeteries and fee-based programs, the total cost of the services we continue to provide is approximately $17 million.

   

Q31. Will the bankruptcy result in additional job losses?

   

A31. One of the most challenging aspects of bankruptcy is that it requires us to give up control over how our resources are allocated. Having cut staff by almost 40 percent since 2002, we already are a thread-bare operation.  Further staff reductions would jeopardize essential services to parishes, schools and others who rely upon the Church for support.

   

Q32. How will the bankruptcy affect employee health insurance?

   

A32. Within days after the archdiocese filed for reorganization, it sought and obtained court permission to continue participating in a multi-employer, partially self-insured health insurance program that covers archdiocesan employees.  The archdiocese intends to continue participating in this plan, called the St. Raphael Health Plan, as a cost-effective way to provide health insurance for employees.

   
     
Impact on Catholic Cemeteries    
     

Q33. Will the bankruptcy affect our pre-purchased crypt/grave? What will happen to the money people have paid to provide for the perpetual care of our deceased loved ones’ gravesites, crypts and mausoleums?

   

A33. Each time an individual or a family purchase a grave or mausoleum site, a portion of the payment is set aside for the perpetual care of the cemetery where the site is located. These funds have always been held as separate from archdiocesan operating funds since they were entrusted to us with the express understanding that they would be used for this purpose only.   

 In 2007, the Archdiocese of Milwaukee Catholic Cemetery Perpetual Care Trust was established to formalize this existing trust relationship. All funds designated for perpetual care are held in, and controlled by, the trust. As such, these assets are not part of the archdiocese’s estate and are not involved in the bankruptcy proceeding.

The archdiocese also sets aside the funds it receives for pre-purchased graves and crypts.  Under Wisconsin law, these “pre-need funds” are segregated in a pre-need trust account and can only be used to provide the grave or crypt which an individual purchased. 

   
     
Impact on Facilities    
     

Q34. What will happen to the Marian Shrine on 68th Street and other archdiocesan properties?

   

A34. In a Chapter 11 reorganization, the goal is for the bankruptcy judge to approve a plan produced by representatives of the debtor (in this case, the archdiocese) and its creditors (in this case,  victims/survivors with outstanding claims, among others) that compensates creditors as fully as possible without putting the organization out of business. This involves the liquidation of any non-essential assets so the proceeds can be distributed to creditors. The archdiocese already has attempted to liquidate all real estate holdings it considers non-essential to raise funds to compensate victims/survivors.  It is too early to predict what will happen to the Marian Shrine or other archdiocesan properties.

   

Q35. Is the Cousins Center still for sale?

   

A35. Yes.  The archdiocese received court permission to retain Cassidy Turley Barry and RFP Commercial as real estate brokers, and these brokers continue to market the Cousins Center for sale.  The current mortgage on the Cousins Center is $4.6 million.  The property was mortgaged to pay for our portion of a settlement of the California lawsuits in 2006, and the property was put up for sale at that time.

   


   
Impact on Religious Orders    
     

Q36. How does this affect religious order priests and sisters?

   

A36. Religious orders are separately incorporated legal entities and are not financially liable for the archdiocese’s debts.  They are separate entities under Church law as well.

   
     
Impact on Pensions    
     

Q37. How will the bankruptcy affect the pensions of archdiocesan employees?

   

A37. The priest and the lay employee pension funds are held in a trust that also holds pension funds from more than 200 other employers. These multi-employer plans are not an asset of the archdiocese and are not part of this bankruptcy filing.   All contributions made by the employers – including the Archdiocese of Milwaukee – are irrevocable and may only be used to pay benefits under the applicable plan.

The other pension plan to which both the archdiocese and the cemetery union employees contribute is the Cemetery and Mausoleum Employees Pension Plan, an independent plan dating to the 1950s.  The union pension plan assets are similarly held in a trust that is not an asset of the archdiocese and not part of the bankruptcy filing.

   

Q38. Is the archdiocese’s pension fund underfunded?

   

A38. Our employees are covered by pension plans that are funded by hundreds of employers. The archdiocese is just one of the participants. Each year the actuaries for the plans calculate whether enough money is in each plan to cover the expected lifetime payouts, assuming funds are prudently invested. If the amount is less than enough to cover expected lifetime expenses, a plan is said to be "underfunded." A determination is then made whether to increase the employers' contributions in future periods to more fully fund the plan. If so, each employer participant must then make additional contributions.

Due to poor investment performance in the last few years because of the recession, many defined-benefit pension plans across the country are “underfunded.” 

As the stock market improved last year, the amount of underfunding was significantly reduced through the investment gains on the plans' portfolios. Underfunding is a problem that defined-benefit pension funds across the nation must address in the long term, but one that does not affect any of our employees in the near term. There is no current cause for concern among plan participants, and the archdiocese intends to continue making its required contributions to the pension plans.

   

Q39. How does the bankruptcy of the archdiocese affect the pension of an employee at a parish?

   

A39. The archdiocese’s reorganization proceedings have no direct impact on the parish employees.  The parishes and other entities who offer retirement benefits through the Lay Employees’ Pension Plan have the same obligations of any other employer in a multi-employer pension plan to make contributions to the Plan based on the service, compensation and actuarial equivalency provisions established by the Plan.  All contributions made by the parishes for their employees are irrevocable and may only be used to pay benefits under the Plan. 

   
     
Legal Counsel    
     

Q40. Who represents the Archdiocese of Milwaukee in this bankruptcy proceeding?

   

A40. The law firm of  Whyte Hirschboeck Dudek  serves as our primary legal counsel , drawing on specialized support from several other Milwaukee law firms.

   

Q41. How much are you paying the lawyers who represent you?

   

A41. We won’t know our total cost for legal counsel until this matter is resolved. But as you would expect, the expense is substantial.  Under bankruptcy laws, the archdiocese is also required to pay the legal fees for the creditors’ committee.

Since 2002, the archdiocese has published an annual Accountability Statement on its response to sexual abuse of minors by clergy. The report details the costs incurred, including those for legal counsel. In 2010, legal expenses related to cases filed against us and cases we filed against insurance companies exceeded $514,000.

While the Chapter 11 reorganization likely will increase our legal expenses in the short term, we believe it will reduce them in the long term by serving as a final call for claims against the archdiocese that pertain to past events.

   

Q42. Who represents the victims?

   

A42. Most of the victims/survivors who are listed as creditors in this action are represented by Minnesota attorney Jeffrey Anderson and his associates.  Other attorneys also represent additional victims/survivors.

   
     
Lawsuits    
     

Q43. What happens to the lawsuits that have been filed against the archdiocese?

   

A43. When an organization files for bankruptcy, all lawsuits against it are put on hold.  The bankruptcy laws create a process for determining the validity of any claim, with the ultimate goal of fairly allocating assets among the legitimate claims, recognizing that it is not possible to pay all claims in full.  Eventually, the bankruptcy court will determine the value of the claims made in these lawsuits, so that those individuals’ claims are part of any bankruptcy settlement. 

   

Q44. Critics say you filed for bankruptcy to halt lawsuits before depositions would occur. Is that true?

   

A44. No.  In fact, interviews of archdiocesan staff could still occur under the Chapter 11 proceeding.  The reason for filing for Chapter 11 reorganization was the failure to reach a mediated settlement of the pending lawsuits.  When it became apparent there would be no resolution outside a courtroom and after we lost our battle to force our insurance companies to defend these cases, we made the difficult decision to file for Chapter 11 reorganization.  In doing so, all legal preparations for trial were halted, saving the archdiocese additional legal fees.  We also realized there might be more claims filed in the future.

We filed for bankruptcy for three reasons – to compensate victims/survivors equitably; to continue our outreach to those who have been harmed; and to move forward on stable financial ground.  We believe our filing for Chapter 11 reorganization can accomplish these goals.

   

Q45. How many lawsuits were pending when you filed for bankruptcy? How much could they have cost the archdiocese in total?

   

A45. At the time of the filing, we were aware of 12 lawsuits involving 17 plaintiffs. Estimated costs of trying these cases in court were in the millions of dollars and any judgments or settlements would have incurred additional costs. 

   

Q46. Is it possible for lawsuits alleging clergy sexual abuse to still be filed after the archdiocese comes out of bankruptcy?

   

A46. No.  The bankruptcy laws are designed to enable debtors to wipe the slate clean and start fresh after compensating creditors as fully as possible.  After a debtor files for bankruptcy, the law requires that a notice announcing the deadline for filing claims be disseminated extensively so those who believe they have a claim against the debtor can come forward and, if their claim has merit, join other creditors in sharing in the proceeds distributed based upon the plan of reorganization.  After passage of the so-called “bar date,” the archdiocese will file and seek court approval of a plan of reorganization that resolves all known and unknown claims.

In addition, the policies and procedures we now have in place to prevent, deter and detect abuse are among the most rigorous in the world, greatly reducing the potential for these kinds of cases to ever arise again. Indeed, the number of allegations involving incidents occurring after 1990 is very small, so the potential for future lawsuits is much diminished. 

   

 

 

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The Archdiocese of Milwaukee

3501 South Lake Drive
PO Box 070912
Milwaukee, WI 53207-0912

Phone:  (414) 769-3300
Toll-Free: (800) 769-9373
Fax:  (414)  769-3408