MOTION TO DISMISS ARCHDIOCESE OF NEW ORLEANS BANKRUPTCY PROCEEDING FILED
On July 3, 2020, attorneys for the Official Committee of Unsecured Creditors filed a Motion to Dismiss the Archdiocese of New Orleans Chapter 11 Bankruptcy Case.
Under Fifth Circuit and other authority, “bad faith” dismissal of a Chapter 11 bankruptcy case is warranted when the debtor commences a bankruptcy not to reorganize or respond to financial crisis (or for some other valid reorganizational purpose), but instead to gain a litigation advantage.
The bankruptcy filing brought an immediate halt to the litigation, further delaying abuse claimants from any recovery. The Archdiocese presumably hopes to force the abuse survivors into an involuntary collective bargaining process, with the benefit of a claims bar date, discharge and channeling injunction, while gaining the other tactical advantages.
By filing the bankruptcy and removing the litigation to federal court, the Archdiocese worked to gain immediate tactical advantages, including:
- Stopping a discovery process that threatened to publicly expose information showing the Archdiocese’s mishandling and cover-up of abuse;
- Avoiding a May 28, 2020 scheduled deposition of Archbishop Aymond; and
- Evading upcoming evidentiary hearings on prescription defenses, with a change to a federal forum that will not provide plaintiffs with the same procedure.
To view the pleading in its entirety click here: Committee Motion to Dismiss Bankruptcy 2020-07-03.