Diocese of Norwich seeks April 20 hearing for Chapter 11 plan

By Sarah Lizee

Olympia, Wash., Jan. 30 – The Norwich Roman Catholic Diocesan Corp., known as the Roman Catholic Diocese of Norwich, is seeking to schedule an April 20 hearing on confirmation of its Chapter 11 plan of reorganization, according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Connecticut.

As previously reported, the diocese filed its plan on Jan. 17.

The plan will be funded by contributions to a trust, including $250,000 from Catholic entities, $5 million from the Catholic Mutual Relief Society of America, $7 million from the Oceania Province of the Congregation of Christian Brothers, $2.5 million plus net proceeds of a property sale from parish parties, and the net proceeds of the sale of its interests in certain properties, among other amounts.

Under the plan, the allowed M&T Bank Corp. secured claim will be granted a continuing lien on the diocese’s interest in replacement collateral acceptable to both M&T and the diocese under an amended promissory note and security agreement to be executed on or before the effective date, amortizing the claim under terms acceptable to M&T and the diocese.

The diocese will affirm, acknowledge and ratify the diocese’s continuing obligations under the M&T guaranty agreement, which will remain in full force and effect after the effective date and will not be discharged under the plan.

After closing of the Middletown property sale and after satisfaction of all conditions, RBS Citizens, NA will completely release and discharge the diocese from any obligations under the Citizens guaranty agreement.

Holders of other priority claims will get either payment from the reorganized diocese of the full amount of their claims in cash, without interest, on or as soon as possible following the effective date; or, payment of their claims as agreed between holders and the diocese.

Holders of general unsecured claims will receive payment in cash in an amount equal to their claims, payable on or as soon as possible after the last to occur of the effective date, the date the claims become allowed, and the date the claimants and diocese otherwise agree in writing; or other treatment that leaves the claims unimpaired, including reinstatement.

The plan creates a trust to fund payments to known abuse claimants. Each claimant’s share of the trust assets is the only amount, if any, claimants will be entitled to receive from the diocese or participating parties.

As of the effective date, the liability of the diocese or participating parties for the channeled claims will be assumed fully by the trust.

The plan requires that the reorganized diocese fund a reserve to make payments to unknown abuse claimants. The reserve amount will be funded in an amount reflected in a representative’s report to be filed before confirmation. These claimholders will not receive any distributions from the trust or trust assets, other than out of the unknown abuse claims reserve.

Abuse related indemnity and contribution claims will be discharged and holders will receive no distribution under the plan and will be channeled to the trust.

The diocese has reached a settlement with the parish parties and schools. As part of the settlement, and to maximize recovery for abuse claimants, the parish parties and schools have agreed to waive all rights to distributions on account of their claims.

Holders of M&T secured claims, Citizens guaranty claims, known abuse claims, unknown abuse claims, and parish party claims, catholic entity claims and school claims are entitled to vote on the plan.

Holders of M&T guaranty claims, other priority claims and general unsecured claims are deemed to accept the plan.

Holders of abuse related indemnity and contribution claims are deemed to reject the plan.

The Norwich, Conn.-based diocese filed bankruptcy on July 15, 2021 under Chapter 11 case number 21-20687.

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