Susan G. Boswell, Esq. (AZ #004791; Admitted Pro Hac Vice) Kasey C
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Susan G. Boswell, Esq. (AZ #004791; Admitted Pro Hac Vice) Kasey C. Nye, Esq. (AZ#020610; Admitted Pro Hac Vice) Lori L. Winkelman, Esq. (AZ#021400; Admitted Pro Hac Vice) QUARLES & BRADY LLP One South Church Avenue Suite 1700 Tucson, Arizona 85701-1621 Telephone: (520) 770-8700 Facsimile: (520) 770-2222 Email: [email protected] Email: [email protected] Email: [email protected] Michael R. Mills, Esq. (AK #891174) DORSEY & WHITNEY LLP 1031 West Fourth Avenue Suite 600 Anchorage, AK 99501-5907 Telephone: (907) 276-4557 Facsimile: (907) 276-4152 Email: [email protected] Attorneys for Debtor, Catholic Bishop of Northern Alaska IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA CATHOLIC BISHOP OF NORTHERN ) Case No. 08-00110-DMD ALASKA, an Alaska religious corporation ) sole, ) (Chapter 11) ) Debtor. ) ) ) ) ) FIRST AMENDED AND RESTATED DISCLOSURE STATEMENT IN SUPPORT OF DEBTOR'S FIRST AMENDED AND RESTATED PLAN OF REORGANIZATION FOR Quarles & Brady LLP CATHOLIC BISHOP OF NORTHERN ALASKA DATED MARCH 31,MAY 14, 2009 One South Church Ave. Suite 1700 Tucson, Arizona 85701- 1621 TABLE OF CONTENTS I. INTRODUCTION .....................................................................................................................1 II. INFORMATION ABOUT THIS DISCLOSURE STATEMENT AND PLAN CONFIRMATION PROCESS...................................................................................................2 A. Definitions And Plan Supremacy...................................................................................2 B. Limited Representations................................................................................................3 C. Voting Procedures..........................................................................................................5 III. .....................................................................................................OVERVIEW OF THE PLAN IV. THE DEBTOR.........................................................................................................................9 A. The Ministries and Activities of CBNA and the Fairbanks Diocese and their Relationship to Roman Catholic Parishes and Parish Churches in Northern and Western Alaska ..............................................................................................................9 B. Other Ministries and Activities of CBNA ...................................................................12 C. The Sexual Abuse Crisis and the Fairbanks Diocese's Response................................15 D. The Financial Structure and Operations of CBNA..................................................1719 E. Potential Disputes Over Property Ownership and Associated Risks.......................2729 F. CBNA's Assets And Liabilities................................................................................3234 V. SIGNIFICANT EVENTS PRIOR TO THE REORGANIZATION CASE ........................5053 A. Clarification of Fiduciary Relationships..................................................................5053 B. Creation of the Catholic Trust of Northern Alaska..................................................5153 C. CBNA and the Fairbanks Diocese's Response to the Sexual Abuse Crisis............5254 D. The Alaska Clergy Abuse Litigation .......................................................................5356 VI. SIGNIFICANT EVENTS IN CHAPTER 11.......................................................................5457 A. First Day Motions ....................................................................................................5557 B. Employment of Bankruptcy Professionals...............................................................5558 Quarles & Brady LLP C. Establishment of Bar Date and Procedures Related to Filing Claims Under One South Church Ave. Seal...........................................................................................................................5659 Suite 1700 Tucson, Arizona 85701- 1621 D. Construction Motion................................................................................................5759 TABLE OF CONTENTS (continued) E. Insurance and Tort Litigation...................................................................................5760 F. Post-Petition Financing............................................................................................5860 G. The Standing Motion and Related Proceedings.......................................................5861 H. Other Property of the Estate.....................................................................................5962 I. Recession Affects CBNA Income and Budgets.......................................................5962 J. Mediations and Settlement Negotiations .................................................................6064 K. Plan & Disclosure Statement ...................................................................................6064 VII. DESCRIPTION OF THE PLAN.......................................................................................6165 A. Unclassified and Unimpaired Claims ......................................................................6165 B. Impaired Claims.......................................................................................................6367 VIII. MEANS FOR EXECUTION OF THE PLAN................................................................7276 A. Creation and Funding of the Fund, the Settlement Trust and the Litigation Trust .........................................................................................................................7276 B. Post-Effective Date Performance by the Reorganized Debtor ................................7377 C. Post-Confirmation Management..............................................................................7480 D. Treatment of Executory Contracts...........................................................................7480 IX. EFFECT OF CONFIRMATION .........................................................................................7581 A. Discharge .................................................................................................................7581 B. Vesting .....................................................................................................................7581 C. Channeled Claims ....................................................................................................7682 D. Exculpation and Limitation of Liability ..................................................................7682 E. Permanent Injunction Against Prosecution of Released and Channeled Claims.....7783 X. FEDERAL TAX CONSEQUENCES..................................................................................7884 Quarles & Brady LLP XI. ACCEPTANCE AND CONFIRMATION..........................................................................8086 One South Church Ave. Suite 1700 A. Voting Procedures....................................................................................................8086 Tucson, Arizona 85701- 1621 B. Feasibility.................................................................................................................8288 ii TABLE OF CONTENTS (continued) C. Best Interests Of Creditors And Liquidation Analysis ............................................8389 D. Confirmation Over Dissenting Class .......................................................................8490 XII. ALTERNATIVES TO THE PLAN ..................................................................................8692 XIII. RECOMMENDATIONS OF THE DEBTOR AND CONCLUSION.............................8692 Quarles & Brady LLP One South Church Ave. Suite 1700 Tucson, Arizona 85701- 1621 iii I. INTRODUCTION Catholic Bishop of Northern Alaska, an Alaska religious corporation sole, the debtor and debtor-in-possession ("CBNA" or the "Debtor") in the above-captioned Chapter 11 reorganization case (the "Reorganization Case"), has prepared this First Amended and Restated Disclosure Statement ("Disclosure Statement") in connection with soliciting acceptance of the "Debtor's First Amended and Restated Plan of Reorganization for the Catholic Bishop of Northern Alaska" dated March 31,May 14, 2009 (the "Plan") from CBNA's Creditors. A copy of the Plan is attached as Exhibit "1" to this Disclosure Statement. It is impossible to overstate the tragedy of the sexual abuse that was inflicted on literally hundreds of Native Alaskan children and teenagers by a small group of individuals, mostly Jesuit priests or in some cases volunteers supervised by Jesuits who purported to be doing the missionary work of the Roman Catholic Church, but instead inflicted untold pain and suffering. CBNA, the civil entity incorporated pursuant to Alaska's Religious Corporations statute for purposes of holding and administering property in trust for the benefit of the Roman Catholic religious entities and functions within the Diocese of Fairbanks (the "Fairbanks Diocese"), proposes the Plan in order to pay just compensation to victims of sexual abuse perpetrated by individuals associated with the Fairbanks Diocese, and to restructure its financial affairs to preserve and develop the ministries and missions that are facilitated by CBNA and are so critical to the people of northern and western Alaska. Since he became Bishop of the Fairbanks Diocese on August 22, 2002, Most Reverend Donald J. Kettler, JCL ("Bishop Kettler") has worked relentlessly to try to bring reconciliation, redemption