NEW ORLEANS — In a move opposed by high-priced attorneys on both sides of the Archdiocese of New Orleans’ expensive and lengthy effort to reorganize, a U.S. bankruptcy judge vowed Tuesday to hire an outside expert to assess whether the church and their creditors can come up with a viable settlement plan.
“People are tired. They are frustrated,” Judge Meredith Grabill said from the bench after hearing attorneys for the church and a committee of creditors urge her to give them a few more weeks to come up with two separate reorganization plans.
Those attorneys have billed upwards of $500 an hour – and as much as $800 an hour – for the last four and a half years, contributing to $40 million in legal and professional fees the church has had to pay so far.
Mark Mintz, from the Jones Walker law firm that represents the archdiocese, and Andrew Caine, from the Pachulski Stang Ziehl & Jones firm representing the creditors committee, argued they have been working hard on a settlement and are mere weeks away from presenting two competing reorganization plans for the church.
Mintz promised those dueling plans would be filed with the court by Sept. 16.
Mintz, Caine, and Douglas Draper, who represent church-affiliated apostolates, complained that hiring an outside expert would be too expensive. Draper questioned why the judge needed an outside expert at all.
“Isn’t that really your job?” Draper asked Grabill.
These arguments earned a rare rebuke from the previously deferential Grabill.
“This is rich,” she said. “Now we’re worried about cost?”
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The judge said her more hands-on approach to push for a settlement was prompted by several recent events. First, the Louisiana Supreme Court reversed an earlier decision and ruled that it was constitutional for state laws to allow victims of child sexual abuse to pursue civil claims no matter how long ago the abuse allegedly occurred.
That meant that about 500 people claiming archdiocesan clergy and staff had abused them as children had standing to bring lawsuits against the church. Mintz and other attorneys for the archdiocese have repeatedly tried to argue the survivors’ claims were too old to have legal standing, which would have paved the way to a much cheaper settlement for the church.
Now, those survivors make up the vast majority of the claimants in the bankruptcy, and a majority of them will have to approve of any reorganization plan negotiated by the church and the creditors committee.
Attorneys representing dozens of those claimants – who, unlike the lawyers for the church and creditors’ committee, don’t get paid for their work until their clients collect – then got to take sworn testimony from Lee Eagan, a businessman who has been managing the bankruptcy finances for the archdiocese as a volunteer.
As WWL Louisiana and the Guardian reported exclusively, Eagan testified in early July that he had been cognitively impaired by a car accident and would contradict attorneys for abuse survivors during negotiations for no reason. He also acknowledged approving all the church’s legal fees rather than the church’s in-house lawyer because she is married to a partner at the law firm collecting the fees.
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The survivors’ attorneys then filed a motion asking the court to appoint a trustee to replace Archbishop Gregory Aymond as the decision-maker on church financial matters, thus replacing Eagan.
That motion led to others – from one of the church’s insurers and from the U.S. Trustee who oversees bankruptcy cases on behalf of the Justice Department – calling for Grabill to impose a holdback of 20 percent of the legal and professional fees until a final settlement is reached.
Attorneys for the abuse survivors said they supported Grabill’s decision to bring in an outside expert.
“I think the judge sees that this is going to go a long way into motivating people and to giving confidence to the claimants that this is a transparent process, that the court is wanting to do the right thing and that they can rest assured that the right thing is being done,” said Frank D’Amico, one lawyer representing several survivors.
Grabill said she would issue an order with more details soon but said from the bench that she planned to hire an independent expert to assess the case in 45 days and write a report, which would be made public, within 60 days.
“I’m willing to spend a little bit of money to reinvigorate – or instill for the first time – confidence in this process,” she said. “This is our shot. We’re going to take it.”
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