Archdiocese of New Orleans sells bankrupt real estate | Economic news

More than two years after filing for Chapter 11 bankruptcy protection in the face of growing lawsuits related to child sexual abuse, the Archdiocese of New Orleans begins to raise funds by selling some of its vast real estate.

Lawyers for the local Roman Catholic Church will ask a judge this week to allow two separate transfers of ownership to proceed. One is the sale of a former 12-story office building at 1000 Howard Ave. to a Lafayette-based investor. The other is the sale of a parking lot on Loyola Avenue behind the Howard Avenue building.

Together, the transactions would generate nearly $10 million for the local church and follow property sales totaling about $1.9 million earlier in the bankruptcy process.






It is unclear how much of the millions raised from property sales will go towards resolving the 450 abuse complaints filed against priests and other clergy who have served in the archdiocese. And it’s also unclear what other financial steps Archbishop Gregory Aymond and his advisers will take to repay what is expected to be a multi-million dollar settlement with abuse victims.

That’s partly because the case is still moving slowly in U.S. bankruptcy court, where some proceedings are being kept away from the public.

When the Catholic Church of New Orleans joined two dozen other U.S. archdioceses in filing for bankruptcy in May 2020, it listed $243 million in assets and $139 million in liabilities.







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Bishop Gregory Aymond at his office in the Archdiocese of New Orleans on Monday, June 24, 2019.




At the time, Aymond said the church, which serves 500,000 Catholics in 112 parishes, had to seek Chapter 11 protection due to rising costs of abuse settlements and the fallout from the pandemic.

Financial records previously valued buildings and land owned by the Archdiocese at around $70 million. But that estimate is likely significantly lower than what the properties would fetch on the market, because it’s based on the prices the archdiocese has paid for the properties.

It also does not include the value of real estate owned by individual churches and church-related entities. The church has not publicly stated the estimated market value of its more than 200 properties owned by the archdiocese.

The archdiocese declined to comment on the property sales or the bankruptcy proceedings more generally.

Still, attorneys involved in the case view the ongoing sale of two downtown properties as a step forward in the bankruptcy case, but not an indication that a settlement with survivors is within reach.

“We’re glad they did and consulted with us, but that doesn’t mean there’s been a settlement or that we’re headed toward a settlement,” said Los Angeles attorney Jim, Stang. . based Pachulski Stang Ziehl & Jones, which represents the committee of unsecured creditors in the case.

Federal probe

Bankruptcy cases generally move slowly. A case like that of the Archdiocese, which is shrouded in allegations of child sexual abuse by priests, is no exception.

Dozens of lawyers have spent the past two years debating whether the case should be dismissed because the archdiocese is not insolvent. They also wondered how much information should be protected from public view.

There are also other complications.

For example, the The FBI is investigating the allegations than the old pastor of St. Peter Claver Catholic Church in Treme, who was removed from office in 2021 after being accused of raping a child years earlier, may have embezzled nearly $400,000 in church funds.

The archdiocese confirmed last week that it is cooperating with the FBI in its investigation of the case, which came to light in an audit the church had fought to keep private.

Archdiocesan officials said the incident was unrelated to the larger financial problems of the bankruptcy and that the alleged financial irregularities at St. Peter Claver were an isolated incident.

The FBI is also investigating allegations dating back decades that clergy took children to other states to assault them, potentially in violation of federal sex trafficking laws. The Associated Press reported. The church had denied knowledge of the investigation.

Excess property

Amid federal investigations, bankruptcy attorneys are trying to come up with a settlement plan to compensate the hundreds of sexual abuse victims who have filed claims against the church.

Selling a property is a way to start liquidating assets and raising funds for those settlements. To date, the church has completed the sale of a single major parcel, the former St. Elizabeth Ann Seton Kenner School, which promoter acquired at auction for nearly $1.9 million.

The sale of the Howard Avenue properties is considerably larger and a relatively easy way for the church to generate cash because it is surplus property, according to Stang.

“It was a building that they felt they no longer needed and given its condition, maintenance costs and hurricane damage, it was excessive,” Stang said. “They need to raise funds and that’s something they apparently don’t need anymore.”

Bankruptcy will allow the Archdiocese to consolidate all of its historic abuse claims and attempt to outgrow them financially. But the process itself is costly, noted Jason Berry, an author who has written extensively on the Catholic Church, the abuse crisis and church finances.

“The church is paying lawyers heavily, cutting funds available to survivors, many of whom need money to rebuild fractured lives,” Berry said.

New developments

While the pending sales may not signal a settlement in the bankruptcy filing, the agreements are important for what they mean for the potential Howard Avenue redevelopment.

Lafayette-based Triple or Nothing, LLC signed a purchase agreement with the archdiocese earlier this year for $8.3 million to acquire the Howard Avenue mid-century modern office building, which includes adjoining parking and parking.







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The Archdiocese of New Orleans building at 1000 Howard Ave. in New Orleans on Monday, Oct. 3, 2022. (Staff photo by David Grunfeld, NOLA.com | The Times-Picayune | The New Orleans Lawyer)




Court records show the group agreed to complete the sale by December 30 and a due diligence period expired on November 7, meaning that with the court’s blessing, the sale agreement will continue.

Triple or Nothing, LLC is registered with Samer Mohd, a Lafayette investor who owns several businesses in Lafayette and several local investment properties in Mid-City and near Tulane Avenue.

Commercial real estate broker Parker McEnery, whose company is representing the archdiocese in the liquidation of its real estate assets, would not discuss details of Mohd’s plans for the site. But he said the investor planned to redevelop the site into a hospitality concept that would be new to the market.

“That would be a great deal for the Howard Avenue corridor,” McEnery said. “This is a major redevelopment project.”

The other transaction in court is the sale of a parking lot directly behind the Howard Avenue building. Local property development company Mk RED signed a purchase agreement to acquire the land for $1.68 million, court records show.

Mk RED declined to comment on the pending sale or the company’s plans for the property. But the company’s portfolio includes several multi-family developments in Mid-City, as well as redevelopments of older homes and buildings.

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