Tensions with insurers mount in Archdiocese of Baltimore bankruptcy case

Archdiocese spokesperson Christian Kendzierski did not directly address a question about whether the church would remain in bankruptcy if the law was declared unconstitutional, but reemphasized previously stated motivations for entering bankruptcy.

“The Archdiocese entered bankruptcy reorganization proceedings with the goals of providing equitable compensation to victim-survivors and allowing the Archdiocese to move forward more securely in its mission of ministering to the people of the Archdiocese,” Kendzierski said in an email. “We continue to hope and expect a negotiated, court-approved resolution in the bankruptcy case that meets these goals.”

Kendzierski added that the church was “glad to hear from insurance carriers in the most recent meeting that they share a strong desire to participate in mediation within the bankruptcy case.”

The chair of creditors’ committee deferred comment to the committee’s legal team, which declined to comment.

Attorney Jonathan Schochor, who represents a member of the creditors’ committee, called the insurance companies’ objection to the committee’s request to hire experts “nonsensical” and “frivolous.” He said the argument fits with broader delay tactics by the insurers.

The longer insurance companies can postpone paying claims, the more time they have to generate income on the investments they made with the church’s money, Schochor said.

“The whole approach by the insurance industry is delay, delay. Don’t pay,” he said. “Just say no.”

Two of the insurance companies later withdrew their objection, but maintained concerns over the experts proposed by the creditors committee, particularly as it pertained to the insurance expert. They said that expert had participated in previous archdiocese bankruptcies and had a record of asking insurers to contribute too much money, jeopardizing the proceedings.

Attorneys for those insurance companies did not respond to requests for comment.

In the court filing withdrawing their objection, those two companies cited the bankruptcy of the Catholic Diocese of Rockville Centre, New York, as an example of a case in which the insurance experts advised a creditors’ committee. That diocese recently asked to leave bankruptcy after the creditors’ committee rejected a proposed plan for reorganization including $200 million to settle 590 claims.

While Schochor is confident that the insurers would sit down with the archdiocese and survivors to work out a mutually agreeable resolution to the case, the two insurance companies that withdrew their objection expressed concern about having “a seat at the table.”

In their filing, the companies said they reserve all of their rights, including their “rights under its policies to deny coverage if the Debtor refuses to cooperate with it in seeking to defend and resolve the asserted abuse claims.”

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