Outside Expert Advises Delaying Pay in New Orleans Archdiocese Bankruptcy to Foster Agreement on Clergy Abuse Settlements

 

In the complex bankruptcy case involving the Roman Catholic Archdiocese of New Orleans, outside restructuring expert Mohsin “Mo” Meghji has proposed a three-month pause on pay for all professionals involved. This recommendation aims to encourage compromise between the church and survivors of clergy abuse, with the parties still hundreds of millions of dollars apart on settlement terms.

Meghji, a New York-based restructuring specialist, suggested that if the church and victims cannot reach a settlement during this time, a special examiner should investigate all assets of the archdiocese, including cash and real estate, to ensure transparency and verify the legitimacy of the bankruptcy filing. Meghji’s report was presented to the U.S. Bankruptcy Court and Judge Meredith Grabill on Wednesday, following his appointment to review the church’s financial state amid the prolonged legal proceedings.

The bankruptcy, initially projected to cost $7.5 million, has already exceeded $40 million in fees and expenses. Meghji's report suggests that both parties have the potential to reach a "broadly consensual" reorganization plan, offering monetary and non-monetary benefits to the survivors while allowing the church to continue essential services.

Attorneys for the archdiocese have proposed settlements of about $125,000 per survivor, with no contributions from insurers, while the abuse survivors are seeking around $2 million each, mostly from the church’s insurance coverage. For comparison, similar diocesan bankruptcies in Los Angeles and New York awarded survivors an average of $650,000 and $609,000 per claim, respectively.

Meghji’s report also addressed questions about the church’s leadership, particularly Lee Eagan, who serves as the archbishop’s representative but reportedly lacks expertise in restructuring. Despite Eagan’s past health issues, the report suggests that he may still be able to lead effectively with the guidance of attorneys and advisers.

The archdiocese's attorneys previously argued that removing control from Archbishop Gregory Aymond would violate the separation of church and state. However, Meghji emphasized the importance of survivor-centered resolution and stronger measures to prevent future abuse.

Survivors’ attorney Soren Gisleson expressed cautious optimism, suggesting that the report might pressure Archbishop Aymond to take survivors' concerns more seriously. Gisleson also indicated plans to question Meghji and his team about some report statements.

Meghji’s involvement is not without controversy; he has recently been scrutinized by the FBI due to potential ethical concerns in a separate bankruptcy case. Despite this, Grabill appointed him based on his restructuring experience, including high-profile cases like Sears and Vice Media, to instill confidence in the case’s resolution.

Meanwhile, the archdiocese faces ongoing investigations. In April, Louisiana state police and the FBI executed a search warrant as part of a probe into allegations of historic child abuse cover-ups within the New Orleans archdiocese.

In his report, Meghji concluded that the next 90 days are crucial, highlighting that "survivors deserve better" and stressing that a fair settlement is essential for restoring trust in the bankruptcy process. The archdiocese has yet to respond to the recommendations in the report.