With Court Order, Stinson Lawyers Can Pursue Fraud Claims in Roman Catholic Diocese of Harrisburg Bankruptcy: Stinson Law Firm LLP

Church officials can’t protect an estimated $95 million asset

The Harrisburg Diocese Tort Plaintiffs Committee, who are represented by Stinson LLP attorneys Robert Kugler and Edwin Caldie, can investigate and prosecute for fraud against two trusts established by Catholic officials. The decision to grant derivative status by Chief Bankruptcy Judge Henry Van Eck opens the door for clergy sex abuse survivors to seek recovery of $95 million in assets.

Assets consist of over $50 million in real estate owned by the Roman Catholic Diocese of Harrisburg Real Estate Trust and over $40 million in assets managed by the Roman Catholic Diocese of Harrisburg Charitable Trust. Despite arguments from the Diocese of Harrisburg, the judge found that Pennsylvania state law permits an unincorporated religious entity to hold title to property and that the fraudulent nature of the Diocese’s transfers of its actual assets and not real to the trusts could not reasonably have been known. to creditors of the diocese until the diocese files for bankruptcy. With Justice Van Eck’s decision, the purpose of creating such trusts can be determined and whether or not the transfers were made fraudulently in order to escape financial liability.

Kugler said victims of abuse feel gratified and empowered by the judge’s decision, and he expects the prosecution of assets held in trusts may take next year to unfold.

Since 2015, Stinson’s bankruptcy and creditors’ rights attorneys have led the country in representing unsecured creditors’ committees made up of survivors of sexual abuse. They understand all dimensions of insolvency issues, from bankruptcy cases and adversarial proceedings, to in-court receiverships and out-of-court restructurings. Additionally, attorneys in this practice group have extensive experience representing the full range of parties, including secured and unsecured creditors, landlords and tenants, official and ad hoc committees, purchasers and asset lenders, as well as trustees and other estate representatives.

Kugler is a leader in representing sexual abuse survivors in enforcing their bankruptcy claims, securing the largest ever recovery in the bankruptcy of a Catholic diocese in the Archdiocese of St. -Paul and Minneapolis.

Caldie also plays a prominent role in representing survivors of sexual abuse as well as in a variety of large and often groundbreaking bankruptcy cases, representing a range of clients in Chapter 11 cases, workouts, civil lawsuits and commercial disputes.

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