Bankruptcy Court filing accuses Camden diocese of concealing assets

CAMDEN – A Bankruptcy Court filing accuses the Diocese of Camden of concealing assets of more than $20 million in its ongoing bankruptcy action.

The motion, brought on behalf of a creditors' committee, asks a judge to find the diocese in contempt and to order it to produce amended financial records.

An attorney for the diocese said the committee's filing was "based on false premises and, therefore, must be denied."

The motion comes during a dispute over the amount of money the diocese will provide to settle claims of clergy sex abuse.

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The diocese, which initially proposed a $10 million fund, last month said it would offer $53 million to sex-abuse survivors.

The Camden diocese filed for Chapter 11 protection from creditors in October 2020, citing the expense of clergy sex abuse claims and financial stress from the COVID-19 pandemic.

Its reorganization plan, including a fund for survivors' claims, would need approval from U.S. Bankruptcy Judge Jerrold Poslusny in Camden.

In Tuesday’s filing, the creditors' committee — representing about 300 sex-abuse claimaints — says the diocese “has deceived all parties (in its bankruptcy action) through its misstatements and omissions.”

The motion asserts the alleged undervaluing of assets "at best … is the result of novel accounting."

"At worst, and more likely, the (diocese) is attempting to shield its assets from creditors,” says the filing by attorney Jeffrey D. Prol of Roseland, Essex County.

It contends the diocese failed to disclose more than $23 million in a "Deposit and Loan Fund" report in January 2021.

It also says the committee did not get required notice that the diocese had opened a bank account with a current balance of more than $9 million.

It contends the diocese is trying to convince creditors that it's "in dire financial straits” so claimants will accept its “meager” proposal as “the best they can hope to receive.”

The filing also notes Poslusny has the authority to impose costly sanctions on the diocese under a contempt ruling.

An attorney for the diocese called the committee's allegations "a contrived claim."

Richard Trenk of Livingston, Essex County, asserted the diocese "has not sought to hide assets in this bankruptcy case and fully recognizes that accurate and complete disclosures are a tenet of bankruptcy."

In a letter to Poslusny, Trenk said the diocese had discussed the new bank account during a Nov. 8 mediation session with the creditors' committee.

He alleged the committee, "in an apparent attempt to play 'gotcha,'" had not followed up on its requests for records about the account since that time.

And while the committee's filing accused the diocese of "obfuscation and posturing," Trenk described the claimants' action as "another rhetorical flourish and attempted roadblock aimed at further delaying the progress of these proceedings."

The Camden diocese serves about 475,000 Catholics in six South Jersey counties.

It previously has reported paying $11 million to sex-abuse victims from the mid-1990s to the late 2010s. The diocese also said it paid $8 million two years ago to settle 71 claims while participating in a program created by the state's five Catholic dioceses.

Jim Walsh covers public safety, economic development and other beats for the Courier-Post, Burlington County Times and The Daily Journal.

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This article originally appeared on Cherry Hill Courier-Post: Lawyer for sex-abuse survivors accuses Camden diocese of hiding funds