I much appreciate the response, but I thought I might ask a
couple of follow-up questions.
First, how would Chapter 11 law handle debtors who routinely
give away goods and services, for the sake of giving them away?
Businesses generally try to make money with nearly all their activities;
that's broadly consistent with chapter 11's goal of preserving and
augmenting the estate for the benefit of creditors, and with bringing
the business back to profitability. But many of the Catholic Church's
activities just give away goods (e.g., food at a soup kitchen) or
services (e.g., subsidized education).
I take it that if a business was giving away lots of goods and
services, with no real hope of getting an indirect profit out of them,
the trustee would stop that. (Same for individual charitable
contributions, though there are special exemptions for that -- and of
course there's been RFRA litigation over the issue as well.) Would the
trustee likewise tell the Church to stop running soup kitchens or
homeless shelters? To stop running its schools, if they're set up to
lose money? Or would the Church be able to argue that it has to run
these projects to get income in the form of parishioner contributions?
What would it have to prove to have this argument win?
I take it that similar issues can come up with Chapter 11
reorganizations of any charitable institution -- but I rarely hear of
such reorganizations. I'd love to hear what bankruptcy experts think
about that.
Second, how persuasive would the argument that the Church asked
for reorganization, and now has to take the bitter with the sweet, be
given Sherbert v. Verner? After all, Sherbert held that a state
couldn't say "If you want unemployment benefits, you have to agree to
take any job, even if it conflicts with your religion." RFRA presumably
retains that doctrine, and as a liberty right, not just an equality
right (as Justice Stevens argued Sherbert should be understood). And of
course federal courts have generally held (correctly, in my view) that
RFRA as to the federal government does survive City of Boerne. So
couldn't the Church likewise argue that once the government offers a
generally available benefit, here Chapter 11 rather than unemployment
benefits, it has to respect beneficiaries' religious freedom claims even
in distributing the benefit?
Many thanks,
Eugene
> -----Original Message-----
> From: [EMAIL PROTECTED]
> [mailto:[EMAIL PROTECTED] On Behalf Of
> Christine A Corcos
> Sent: Wednesday, July 07, 2004 8:00 AM
> To: [EMAIL PROTECTED]
> Subject: Re: FW: Interesting question: Portland Archdiocese
> Filing Chapter 11
>
>
>
>
>
>
> I am posting some responses to the questions below from my
> colleague Jason Kilborn. His answers are in all caps.
>
> Christine Corcos
> Associate Professor of Law
> Faculty Graduate Studies Program Supervisor
> Paul M. Hebert Law Center, Louisiana State University
>
>
> Ok, here is an interesting one for all of you:
>
> -- Under Employment Division v. Smith applies, does the
> Archdiocese have a free exercise defense to, for the example,
> the appointment of a trustee or an examiner?
>
> I DON'T THINK SO. FIRST, A TRUSTEE OR EXAMINER PROBABLY
> WON'T BE APPOINTED UNLESS THE CHURCH IS GUILTY OF GROSS
> ECONOMIC MISMANAGEMENT (E.G., A LA ENRON). THAT'S NOT ITS
> PROBLEM (MASS TORTS ARE ITS PROBLEM), SO A TRUSTEE/EXAMINER
> IS UNLIKELY. IF ONE WERE APPOINTED, THOUGH, I DON'T SEE ANY
> CONFLICT BETWEEN THE ECONOMIC CONTROL A TRUSTEE WOULD IMPOSE
> AND THE FREE EXERCISE OF THE CHURCH'S RELIGION. CERTAINLY A
> CONNECTIION EXISTS--A TRUSTEE MIGHT SAY NO FUNDS TO X, Y, OR
> Z THAT THE BISHOP THINKS IS IMPORTANT, BUT I DON'T SEE THIS
> AS INTERFERENCE IN RELIGIOUS PRACTICE, AS OPPOSED TO
> INTERFERENCE IN ECONOMIC MATTERS ONLY TANGENTIALLY RELATED TO
> MATTERS OF RELIGION.
>
> -- Might the Archdiocese have any RFRA defense in a
> bankruptcy proceeding, post-Boerne?
>
> I DON'T THINK SO--AND I THOUGHT RFRA WAS DEEMED
> UNCONSTITUTIONAL YEARS AGO . . . . I DON'T SEE ANY BASIS FOR
> A RFRA CLAIM IF THE CHURCH SEEKS RELIEF IN BANKRUPTCY
> VOLUNTARILY IN ANY EVENT.
>
> -- If this is a voluntary proceeding, does that automatically
> finish any free exercise defenses the Archdiocese might
> otherwise have?
>
> I THINK SO, BUT YOU KNOW MORE ABOUT THE CON LAW STUFF THAN I.
> THE CHURCH HAS WAIVED SUCH OBJECTIONS BY SEEKING RELIEF AND
> SUBJECTING ITSELF TO INCREASED SUPERVISION AND
> OVERSIGHT--QUID PRO QUO.
>
> -- Does anyone know what would be included in the property
> of the estate? Religious relics? Schools?
>
> THIS IS A MATTER OF OREGON LAW, BUT MOST LIKELY EVERYTHING
> THE CHURCH OWNS IS PROPERTY OF THE ESTATE. ONLY INDIVIDUALS
> HAVE EXEMPTIONS TO AVOID THEIR BECOMING WARDS OF THE STATE.
> ORGANIZATIONS--INCLUDING CHURCHES--HAVE NO EXEMPTIONS UNDER
> GENERAL LAW. MAYBE OREGON HAS SOME SPECIAL CHURCH-PROPERTY
> EXEMPTION LAW, BUT I DOUBT IT. ANY IMMOVABLE (REAL)
> PROBABLY, LIKE SANCTUARIES AND SCHOOLS, IS MOST LIKELY NOT
> EXEMPT AND IS PROBABLY THE CHURCH'S ONLY VALUABLE PROPERTY.
> THIS DOES NOT MEAN THAT RELICS WILL BE SOLD TO THE HIGHEST
> BIDDER. IT JUST MEANS THAT CREDITORS WILL HAVE TO RECEIVE IN
> A PLAN AT LEAST AS MUCH AS THEY WOULD IF THE RELICS, SCHOOLS,
> ETC., WERE SOLD AND THE NET PROCEEDS DISTRIBUTED TO CREDITORS.
>
> -- Is the Archdiocese correct in treating this case as a
> mass tort-related bankruptcy, or does the unusual nature of
> the debtor make this a bad call?
>
> I DON'T SEE ANY OTHER WAY TO TREAT THE CASE, AND HOW YOU CALL
> IT IS ALL BUT IRRELEVANT. A DEBT IS A DEBT IN CHAPTER 11,
> AND CALLING THIS A MASS TORT CASE MIGHT EVEN IMPROVE THE
> CHURCH'S BARGAINING POSITION.
>
>
>
>
>
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