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Catholic Diocese of Wilmington Emerges From Chapter 11, Sizable Trust Funded for Abuse Survivors

September 2011

The chapter 11 reorganization plan for the Catholic Diocese of Wilmington went effective September 26.  The settlement fund has approximately $105 million for 150 survivors, which includes $77.5 million from the diocese and related Catholic entities and the balance from a religious order that was codefendant on many claims.  As an average per survivor, the settlement is on the high end of national settlements in bankruptcy proceedings. 

Pachulski Stang Ziehl & Jones (PSZJ), as bankruptcy counsel for survivors of sexual abuse and the entire official committee of unsecured creditors (“Committee”), obtained a key ruling early on in the case that pension fund assets were part of the estate. The appeal of that ruling to the federal Third Circuit will be dropped now that the plan is approved.

When he confirmed the plan, U.S. Bankruptcy Judge Christopher Sontchi described the case as the most difficult of his legal career. He commended Committee counsel for its role in the case.  PSZJ name partner James Stang, counsel for the Committee, thanked the abuse survivors serving on the Committee and Judge Sontchi for his management of the case.

The diocese, which sought bankruptcy protection on October 18, 2009, was the seventh Catholic diocese to file chapter 11 on October 18, 2009 (Archdiocese of Milwaukee was eighth in January 2011). PSZJ represents or has represented committees of abuse survivors in six of those cases, as well as committees in the Society of Jesus Oregon Province case and the Christian Brothers case.