Ballots will now be mailed to creditors of the Diocese of Davenport to vote on a plan that would allow the diocese to emerge from bankruptcy.The creditors, mostly victims of clergy sexual abuse committed when they were children, will have until April 23 to return their ballots to the diocese’s bankruptcy attorney, Dick Davidson.
He will tabulate the ballots and report on the results of the vote during an April 30 confirmation hearing on the diocese’s reorganization plan.
The plan outlines how the diocese proposes to distribute a $37 million global settlement it reached with the Committee of Unsecured Creditors and Travelers Insurance Co.
The creditors will review the reorganization plan and the disclosure statement in deciding whether to vote for or against the plan.
The disclosure statement offers information that creditors will use to evaluate the reorganization plan, which protects all Catholic entities in the diocese — parishes and schools, for example — from lawsuits for sexual abuse committed prior to Oct. 10, 2006, the date the diocese filed for bankruptcy.
Approval of the plan requires positive votes from more than one-half of the creditors and must equal at least two-thirds of the total dollar amount to be distributed.
Bankruptcy Judge Lee Jackwig approved the diocese’s amended disclosure statement during an April 2 hearing in U.S. Bankruptcy Court for the Southern District of Iowa.
Her approval came with one condition: that the diocese would further amend the disclosure statement for corrections and clarifications within 24 hours of the hearing.
During the hearing, she also questioned why four parishes were paying into the settlement, but the other parishes were not. If all parishes were benefiting, why weren’t they contributing financially?
While the diocese’s 83 parishes are separate legal entities, they are interdependent of the diocese, Davidson said, which makes this bankruptcy case unique.
He explained that the four parishes contributing $2.9 million toward the settlement — St. Anthony and Sacred Heart Cathedral in Davenport, Our Lady of Lourdes parish in Bettendorf and St. Mary parish in Iowa City — each had substantial claims of abuse and significant assets to be lost if lawsuits were filed against them.
Other parishes that had substantial claims of abuse, particularly in rural areas of the diocese, do not have assets to contribute to the settlement, he said.
In effect, the diocese bought an insurance policy for every parish and all other Catholic entities in the diocese, Msgr. John Hyland, the diocese’s vicar general, told The Catholic Messenger.
The contributions requested from the four large parishes are far less than what they stand to lose from being sued, Msgr. Hyland said.
Sacred Heart Cathedral and St. Anthony parish in Davenport will contribute $1 million each toward the settlement while St. Mary’s will contribute $650,000 and Our Lady of Lourdes will contribute $250,000 toward the settlement.
Travelers Insurance is contributing $19.5 million toward the settlement, while the diocese is contributing $17.5 million, which includes cash and the $3.9 million deed to St. Vincent Center, diocesan headquarters.
St. Vincent Home Corp., the foundation created after the closing of the orphanage, is contributing $3 million.
That still leaves the diocese about $2 million short; it hopes that other parishes may step up to the plate to contribute.
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