Q: What is happening with the reorganization process?
A: On June 26, 2019, the Diocese of New Ulm, parishes and 93 victims and survivors of clergy sexual abuse reached a $34,000,000 settlement in our bankruptcy case. The settlement represents our commitment to finding a fair resolution for victims and survivors of sexual abuse while continuing our ministry for those we serve throughout south and west central Minnesota
The settlement funds are made up of insurance coverage settlements and cash and property contributions from the diocese and parishes, including parishes that do not have claims against them.
When approved, the settlement will resolve our Chapter 11 bankruptcy case. The Diocese of New Ulm filed for financial reorganization under Chapter 11 in March 2017. Since then, under the supervision of the Federal Bankruptcy Court, we have worked with representatives of victims and survivors of clergy sexual abuse to resolve fairly claims made against the Diocese of New Ulm and parishes within the geographic area the diocese serves. These claims were filed under the Minnesota Child Victims Act, which temporarily lifted the civil statute of limitations on historical childhood sexual abuse claims for a three-year period ending in May 2016.
When claimants approve the settlement plan, it will result in a “channeling injunction”, which will prevent claims against the diocese and parishes based on events that occurred before confirmation of the plan of reorganization.
Q: What happens next?
A: The next steps are for the diocese to file with the court the formal plan of reorganization and a disclosure statement, which will provide the claimants the information they need to decide how to vote. The bankruptcy judge will then review the disclosure statement and approve it if it provides adequate information. Then, the plan, disclosure statement, the order approving the disclosure statement, the confirmation hearing notice, and a ballot to the claimants, who will respond by completing and sending in their ballots. When two-thirds of voting claimants approve the plan, it will be up to the bankruptcy judge to determine if all of the requirements of the bankruptcy law have been met. When they have been met, then the judge will issue an order confirming the plan. After confirmation of the plan, a trust will be created consisting of the assets described in the plan. We expect this process will be completed by the end of this year. A plan trustee, approved by the court, will then make payments to the claimants.
Q: Why did the Diocese file for reorganization?
A: On March 3, 2017, the Diocese of New Ulm filed for protection under Chapter 11 of the U.S. Bankruptcy Code in United States Bankruptcy Court for the District of Minnesota. The Diocese filed in order to reorganize its finances and establish a plan to pay its creditors, who are victims and survivors of sexual abuse as minors by clergy, while continuing its operations. Reorganization provides the Diocese with a neutral process to resolve fairly and permanently past claims by victims and survivors while continuing to carry out the mission of the Church. After prayerful and careful review, the Diocese determined that filing for reorganization was the best way to resolve claims fairly. The Diocese of New Ulm is among four dioceses in Minnesota that have filed for reorganization following the enactment of the Minnesota Child Victims Act, which temporarily lifted the civil statute of limitations on historical childhood sexual abuse claims for a three-year period which ended on May 25, 2016.
Q: What does this mean for victims and survivors of sexual abuse as minors by clergy in the Diocese of New Ulm?
A: Reorganization under Chapter 11 means the court supervises a process to resolve fairly claims with victims and survivors and provide equitable compensation. Claimants will vote on the settlement agreement. The disclosure statement, after it is approved by the judge, will be sent to the claimants who will respond by sending in their ballots. If claimants approve the plan and the judge confirms it, a plan trustee approved by the court will make payments to the claimants.
Q: What does this mean for my parish or Catholic school?
A: Parishes, Catholic schools, and other Catholic organizations located in the geographic area the Diocese serves are separately incorporated under Minnesota law. All parishes within the geographic area the Diocese serves, including parishes with no claims against them, have contributed to the settlement fund to increase the amount available to victims and survivors of sexual abuse by clergy. When claimants approve the settlement plan, it will result in a “channeling injunction”, which will prevent claims against the diocese, parishes, and Catholic schools based on events that occurred before confirmation of the plan.
Q: What are the sources of money going to the settlement fund?
A: Insurance coverage, sale of diocesan property and contributions from all parishes within the geographic area the diocese serves, including those that don’t have clergy sexual abuse claims made against them.
- $26 million comes from insurance coverage.
- $7 million comes from cash and property contributions from the diocese. This includes cash from a mortgage on the Pastoral Center.
- $1 million is the combined contribution from all parishes in the diocese. Of the $1 million contributed by all the parishes combined, two parishes that were sued for clergy sexual abuse agreed to contribute approximately $210,000 toward the settlement. The remaining 22 parishes that were sued agreed to pay a total of $350,000 toward the settlement, with each parish contributing between $10,000 and $35,000 apiece. The parishes that were not sued each agreed to contribute $10,000 toward the settlement to help victims and survivors on their healing journey.
When the Plan of Reorganization and Disclosure Statement are filed with the court we will post those documents, which will contain additional settlement funding source information.
Q: Did my donations to the Diocesan Ministries Appeal (DMA) go to settle claims?
A: Donations to the DMA are restricted gifts to be used in support of the specifically designated ministries only. No donations to the DMA were used toward the settlement fund.
Q: If the settlement is approved, how will it affect ministry in the Diocese of New Ulm?
A: We do not expect that the settlement of our bankruptcy case will affect core diocesan ministry. Over the past two years, the Diocese has implemented multiple cost-saving measures, including very difficult staff layoffs and hour and benefit reductions, a more limited publication schedule for The Prairie Catholic newspaper and restrictions on staff travel, in order to provide for fair compensation for victims and survivors while providing for ongoing essential ministry.
Q: If someone was sexually abused as a minor and has not yet come forward, what should he or she do?
A: If someone was sexually abused as a minor by anyone involved in Church ministry in the Diocese of New Ulm, they should immediately report such abuse to local law enforcement, regardless of when the abuse occurred. See contact information for county law enforcement and social service agencies in the 15 counties the Diocese serves.: (Updated 2017)
Victims and survivors of sexual abuse by clergy are also encouraged to contact the diocesan Victim Assistance Coordinator at 1421 6th Street North, New Ulm, MN 56073, or by phone at 507-233-5313, for counseling or other assistance in healing.
Q: Has the Diocese issued a public apology to victims and survivors?
A: Yes. On behalf of the Diocese of New Ulm, Bishop John LeVoir has apologized publicly to victims and survivors and continues to do so both publicly and privately. Please see Bishop LeVoir’s video message.
Q: What if I have additional questions?
A: Please call the diocesan Office of Communications at (507) 233-5332.