By JIM BUTLER
Bankruptcy Judge John Hodge finds the Diocese of Alexandria’s disclosure statement for Chapter 11 resolution falls short of requirements.
He ruled Monday that he believes the statement has “significant legal defects, not deficiencies that additional disclosure can cure.”
Consequently he denied the diocese motion for approval of the disclosure statement and its motion regarding solicitation procedures and other relief.
The disclosure statement outlines how a debtor proposes to settle its affairs emerging from bankruptcy. Solicitation procedures outline the how’s and when’s for voting on the plan by eligible parties.
“Soliciting votes on the plan as currently drafted would be futile and needlessly expend estate resources,” Hodge said.
Several plaintiffs objected early this month to the proposed statement. A hearing was held last week.
A major sticking point appears to be perceived restrictions on plaintiffs’ rights to pursue claims against parishes formerly part of the diocese.
Documents indicate there are about 50 such petitions involving parishes shifted from the Alexandria Diocese to the Shreveport one 40 years ago.
Sexual abuse allegations involving clergy were the catalyst for the bankruptcy filing a year ago this week.
Two years ago the U.S. Supreme Court ruled that the Bankruptcy Code doesn’t permit a Chapter 11 plan to release claims against non-debtors (third parties who have not filed for bankruptcy) without explicit consent of the claimants.
Monday’s ruling appears to put on hold a timetable that envisioned November-December voting, resolution and reorganization.