Diocese of Norwich’s disclosure statement hearing continued

By Sarah Lizee

Olympia, Wash., Nov. 20 – Norwich Roman Catholic Diocesan Corp.’s hearing on approval of the disclosure statement for its Chapter 11 plan has been continued from Nov. 17 to a date yet to be determined, according to a minute entry filed with the U.S. Bankruptcy Court for the District of Connecticut.

The debtor, which is known as Roman Catholic Diocese of Norwich, and the official committee of unsecured creditors are proposing the plan, as previously reported.

Region 2 U.S. trustee William K. Harrington noted in his Aug. 28 objection that the disclosure statement needs to explain and provide sufficient information to allow creditors to understand what the plan proposes to pay them (or not pay them) and the terms of the proposed payment, as well as to assess and decide their position on the proposed plan.

“Yet again, the plan proponents have fallen far short of meeting their obligation because the third amended disclosure statement, like its three predecessors, omits meaningful information, and because it fails to explain and justify the proposed treatment for the creditors,” Harrington said in Tuesday’s objection.

The plan requires the diocese, Catholic Mutual and the participating parties – including the parishes, Mount St. John, Oceania, Xavier, Mercy and St. Bernard – to make fair and reasonable settlement payments, and substantial and meaningful contributions to fund distributions to abuse claimants.

The diocese and the committee estimate that the funding provided for in the plan will ultimately exceed $32 million.

The diocese will be discharged of all claims. The participating parties will be granted releases and the benefit of injunctions related to abuse claims in exchange for their contributions and settlement payments.

Other priority claims are unimpaired under the plan and will receive 100% recovery.

The Citizens secured guaranty claim is impaired, and upon the closing of the Middletown property sale, Citizens will fully, finally and completely release the diocese.

The M&T secured revolving loan claim and M&T secured guaranty claim are impaired, and the claims will be retained.

General unsecured claims are unimpaired and will receive 100% recovery.

Abuse-related contribution claims will receive no recovery.

The claims held by the Catholic entities are impaired under the plan, and the Xavier and Oceania have, as part of their settlement with the diocese, waived the right to receive any distribution under the plan.

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

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