Lowenstein Sandler, counsel to the Official Committee of Tort Claimant Creditors (the Committee) in the Chapter 11 bankruptcy case of the Diocese of Camden, New Jersey (the Diocese), has taken action to protect the rights of sexual abuse survivors who suffered decades of abuse by members of the clergy and to prevent unfair treatment by the Diocese.
As reported in Law.com and the The Philadelphia Inquirer, the Diocese has requested approval of a plan of reorganization that would create a $26 million fund for more than 300 claims, providing for average payments to each survivor of about $81,250, with an option for increasing the fund to $40 million if survivors accept payments over a seven-year period.
Lowenstein attorneys representing the Committee denounced the Diocese proposal as insulting.
Jeffrey D. Prol, Vice Chair of Lowenstein Bankruptcy & Restructuring Department, calls the offer “patently unfair.” He says, “I think it stinks. Based on the extreme trauma suffered by the claimants, if their cases were going to trial in the state court system, some of them would be valued at $10 million each.”
Prol continues: “We conducted an investigation and we uncovered assets, liquid assets and cash and investments, in excess of $250 million. The parishes own a lot of real estate, as does the diocese. To propose to release itself and all the other entities from liability for $26 million when they have assets approaching $1 billion is patently unfair. We will be opposing that plan.”
“The diocese is trying to improperly lowball the value of these claims,” states Lynda A. Bennett, Chair of the firm’s Insurance Recovery group. Bennett calls the offer “woefully inadequate” and says that the Committee is “not interested at all” in agreeing to $40 million in payments spread out over time.
The Committee not only vehemently opposes the proposed Plan of Reorganization, it also has directed Lowenstein to commence several lawsuits against the Diocese and its affiliated Catholic entities asserting a number of claims, including that the assets of certain of the affiliated entities are property of the Diocese bankruptcy estate under several legal theories. In addition, the Committee has requested standing to sue the bishop for his alleged breach of his fiduciary duty and to assert fraudulent conveyance claims against the Diocese and affiliated entities. The Committee will also seek authority to file its own Plan of Reorganization, which will treat survivors of sexual abuse fairly and equitably while allowing the Diocese to maintain its charitable mission.
Simultaneously, Lowenstein is representing the Committee in litigation with the Diocese’s insurance companies, seeking to maximize insurance coverage for their claims under the Diocese’s insurance program, which exceeds one billion dollars.
In addition to Prol and Bennett, the Lowenstein team includes Matthew Boxer, Michael A. Kaplan, Brent Weisenberg, Eric Jesse, Colleen M. Maker, Rasmeet K. Chahil, Arielle B. Adler, Erica G. Mannix, Amanda K. Cipriano, and Raymond Cooper.
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