Bankruptcy trustee in Del. holds private meeting

Federal officials began the process of choosing creditor representatives in the Catholic Diocese of Wilmington's Chapter 11 bankruptcy by meeting with diocesan officials behind closed doors Wednesday.

The U.S. Trustee's office, a branch of the Justice Department that supervises the administration of bankruptcy cases, publicly advertised a meeting at a Wilmington hotel to organize the diocese's committee of unsecured creditors.

But acting U.S. Trustee Roberta DeAngelis declared Wednesday that it was a private meeting that would not start until an Associated Press reporter left a hotel conference room.

Officials repeatedly refused to cite the legal authority allowing them to bar reporters or the public from the meeting, saying only that it was their policy to consider such meetings private.

The judge in the case has not issued any ruling allowing closed-door proceedings, and reporters in Delaware have attended such meetings in the past, including organizational meetings in the Visteon Corp. and Washington Mutual bankruptcies.

After the reporter refused to leave, representatives of the trustee's office and the diocese moved to another room. A representative of the trustee's office stood in front of the door to prevent the reporter from entering, and a hotel employee later locked the door.

Robert Brady, a bankruptcy attorney for the diocese, said the diocese did not request the closed-door proceedings, but that the trustee's office had told the diocese it was their policy.

"This is a meeting called by and run by the U.S. Trustee's office, so we complied with their wishes," Brady said. "They said it's their policy and they can't make exceptions."

The Survivors Network of those Abused by Priests, a support group for clergy abuse victims, decried the secret meeting, even if diocese officials did not request it.

"They could have easily just walked away and said, 'This just does not seem fair or right to us,'" said SNAP national director David Clohessy.

Thomas Neuberger, an attorney for alleged victims, said the Rev. James E. Richardson, an accused child abuser and a defendant in one of the priest sex abuse lawsuits, was among the candidates interviewed later Wednesday for a spot on the creditors committee. Richardson was rejected, along with two female employees of the diocese. The seven people selected as committee members are all alleged victims of priest sex abuse, Neuberger said.

The diocese filed for Chapter 11 bankruptcy protection last month after settlement talks failed with several alleged victims of priest sexual abuse. The filing came on the eve of what would have been the first trial under a Delaware law that created a two-year "lookback" window allowing claims of abuse to be brought even if the statute of limitations had expired. More than 175 lawsuits were filed before the window closed this summer.

James Stang, a bankruptcy attorney representing alleged abuse victims, declined to comment on how the meeting complied with the transparency the diocese has said the bankruptcy will involve.

"I don't think this is the diocese's issue, I think this is the U.S. Trustee's issue," Stang said. "I don't want to comment on whether I think their procedures are proper or not."