It's been a long time (over a year, in fact) since I've posted about the seemingly never-ending Chapter 11 bankruptcy of the Roman Catholic Archdiocese of Milwaukee. For those whose memories are a bit hazy, go here, here, and here to catch up.
Matters have moved forward with an Amended Plan of Reorganization and its Third Amended Disclosure Statement. News reports suggest that the Archdiocese and its nemesis Creditors' Committee (locally represented by my former firm), which advocates for the victims of sexual abuse, have reached a deal. Read about it here.
From a legal perspective the disposition of the cemetery trust has piqued my interest. Buried in the 399-page disclosure statement is the description of the facts surrounding the creation and management of a trust to maintain the thousands of graves of Catholics buried in the the cemeteries maintained by the trust:
Thus, not until three years before it filed its Chapter 11 did the Archdiocese create a formal trust, an event that the victims of abuse assert was to defraud them of a substantial resource for payment of their claims. The Archdiocese (and the cemetery trustees) claim that the history of the administration of the cemetery trust assets demonstrates that the Archdiocese never actually owned the funds even though no formal trust existed.
I have several times remarked on the importance to Christians of demonstrating in a tangible way their belief in the communion of the saints. In other words, the graves of the saints in heaven should be in proximity to the living worshippers. See here and here.
This does not, of course, answer the question of whether the funds in the cemetery trust of the Milwaukee Archdiocese are or should be available to pay the claims of living victim-creditors. It does, however, explain why the Archdiocese and trustees of the cemetery trust fought hard to keeps the trust's assets out of the property of the Archdiocese's bankruptcy estate.
The settlement provides that
This represents a substantial contribution from the cemetery trust, which in turn suggests that its trustees perceived a real possibility of losing. In any event, with these additional funds it appears this case is finally on the road to resolution.
Matters have moved forward with an Amended Plan of Reorganization and its Third Amended Disclosure Statement. News reports suggest that the Archdiocese and its nemesis Creditors' Committee (locally represented by my former firm), which advocates for the victims of sexual abuse, have reached a deal. Read about it here.
From a legal perspective the disposition of the cemetery trust has piqued my interest. Buried in the 399-page disclosure statement is the description of the facts surrounding the creation and management of a trust to maintain the thousands of graves of Catholics buried in the the cemeteries maintained by the trust:
Since at least 1911 , the Archdiocese accepted money to be held in trust for the care of grave sites. For several decades, the Archdiocese told buyers of grave sites that it would put money aside for perpetual care. Buyers of grave sites were assured that funds had been set aside for that purpose. Consistent with that promise, the Archdiocese put a portion of the money from grave site sales into a separate account segregated from the Archdiocese’s general funds. There was a regular and separate audit of the trust fund each year by an independent auditor, and the money was invested by a separate group of outside investment managers. Because the funds were held in trust, special attention was given to ensuring that the funds were separated from the Archdiocese’s general funds and ensuring that these perpetual care funds would be there for their intended and pledged purpose --the care for the resting places of the departed. Perpetual care has important meaning in the Catholic faith. It is to protect the sanctity of the body so that it can one day be reunited with the soul. Catholic cemeteries are sacred places maintained in a way that helps to fulfill God’s promise about death and resurrection. In 2008, the Archdiocese transferred the funds, which at the time were still held in trust in the separate account, to a new formal trust. (Emphasis added.)
Thus, not until three years before it filed its Chapter 11 did the Archdiocese create a formal trust, an event that the victims of abuse assert was to defraud them of a substantial resource for payment of their claims. The Archdiocese (and the cemetery trustees) claim that the history of the administration of the cemetery trust assets demonstrates that the Archdiocese never actually owned the funds even though no formal trust existed.
I have several times remarked on the importance to Christians of demonstrating in a tangible way their belief in the communion of the saints. In other words, the graves of the saints in heaven should be in proximity to the living worshippers. See here and here.
This does not, of course, answer the question of whether the funds in the cemetery trust of the Milwaukee Archdiocese are or should be available to pay the claims of living victim-creditors. It does, however, explain why the Archdiocese and trustees of the cemetery trust fought hard to keeps the trust's assets out of the property of the Archdiocese's bankruptcy estate.
The settlement provides that
The Cemetery Trust agrees to:
(i) reimburse the Archdiocese for past perpetual care expenses that had not previously been reimbursed by the Cemetery Trust;
(ii) contribute $8 million to the Plan Trust;
(iii) lend up to $3 million to the Archdiocese secured by Archdiocesan real estate assets; and
(iv) commit to reimburse the Archdiocese at least $1.95 million per year for costs incurred in maintaining the Milwaukee Catholic Cemeteries for as long as the loan is outstanding. In exchange, the Cemetery Trust will receive a global release of all claims against the Cemetery Trust.
This represents a substantial contribution from the cemetery trust, which in turn suggests that its trustees perceived a real possibility of losing. In any event, with these additional funds it appears this case is finally on the road to resolution.
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