St. John's archdiocese moves into next stage of bankruptcy

The Roman Catholic Episcopal Corporation of St. John’s (RCECSJ) is transitioning into bankruptcy starting this month, a move signalling an end to a five-year restructuring process that resulted in 132 church properties being sold to generate compensation for abuse victims.

Archbishop Peter Hundt told the faithful in a letter that the application for an assignment into bankruptcy was filed with the Supreme Court of Newfoundland and Labrador on Oct. 30. Hundt wrote that since “the liquidation of (RCECSJ) assets is nearly completed, the continuation of the Stay of Proceedings is no longer necessary, and the remaining realization activities can be completed in a more cost-effective manner by a bankruptcy trustee.”  

This journey began Jan. 14, 2021, when the Supreme Court of Canada upheld a July 28, 2020, decision from the Court of Appeal of Newfoundland and Labrador finding the RCECSJ vicariously liable for abuses perpetrated at the infamous Mount Cashel Orphanage during the 1940s, ‘50s and ‘60s. Its operators, the Christian Brothers of Ireland, filed for Chapter 11 bankruptcy back in 2011.

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The 70-year-old Hundt conveyed that calling for a termination of the restructuring proceedings under the Companies’ Creditors Arrangement Act (CCAA) — a request agreed to by Justice Garrett Handrigan — “is an important step in bringing to completion the process of settling the claims of the victims of abuse.”

He expressed hope that “it will help bring some measure of justice and healing to the victims, their families and the archdiocesan faith community, and will bring some measure of closure to this dark chapter in the history of the archdiocese.”

In total, the sale of parish assets generated $32.8 million for abuse claimants. Only seven properties remain unsold. Two have offers pending, and five others are listed with realtors.

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A further $45.8 million was raised by the Government of Newfoundland and Labrador by writing a cheque for individuals abused at Catholic-run institutions throughout the province, including schools, parishes and Mount Cashel.

In total, approximately $85.2 million of the $121 million ordered for victims by the independent adjudicator Global Resolutions Inc. has been distributed. The archdiocesan legal counsel’s projection, as shared with the court, was that 100 claimants would step forward and that the compensation would top out at $50 million. The reality: 369 plaintiffs emerged.

Geoff Budden, counsel for over 200 of the abuse survivors or their surviving loved ones, has expressed on multiple occasions that he is not yet done advocating for these claimants after 27 years. He told The Catholic Register in April that he is calling on the “larger Catholic world” to eventually “make substantial contributions to reflect their potential liabilities.”

The RCECSJ is also actively pursuing an appeal with the Supreme Court of Canada against Guardian Insurance to compel its former provider to cover some of the $121-million settlement. The provincial appeals court ruled on April 16 that Guardian Insurance can void the policy due to the archdiocese’s failure to disclose sexual abuse claims when it purchased the policy in 1980 and renewed it for four subsequent years.

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As for the next steps in the transition to bankruptcy proceedings, Handrigan ruled that the two new entities incorporated by the bishopric during the restructuring process —  St. John’s Archdiocese Inc. and Archdiocesan Renewal Corporation — are released and cannot be targeted for claims against the RCECSJ.

The RCECSJ will hold $1 million in reserves in case other claims or expenses arise in the future, including those related to the appeal case against Guardian Insurance. Following bankruptcy, the trustee will ensure any future money raised through yet-to-be-finalized property sales flows to survivors.

(Amundson is an associate editor and writer for The Catholic Register.)