A federal bankruptcy judge has appointed a nationally recognized restructuring expert to examine the spiraling costs of reorganizing the Roman Catholic Archdiocese of New Orleans under the U.S. Chapter 11 process. The judge is expected to issue a public report within 60 days on whether the local church can afford to pay compensation to about 500 people who allege clergy sexual abuse.
Just one day after Judge Meredith Grabill told lawyers in the archdiocese’s contentious and complex bankruptcy case that they needed outside help, she appointed Mo Meghji, managing partner of New York-based M3 Partners, as an expert witness for the court.
Meghji has more than 30 years of experience helping large companies get out of financial trouble, according to M3’s website. Most recently, he led major restructuring efforts for Sears and Barneys, among others, according to his official biography.
His wages for two months of work are capped at $350,000, with $100,000 paid in the first ten days, Grabill’s order states.
Meghji did not immediately respond to requests for comment.
Grabill ordered the archdiocese, its attorneys and professional advisers, as well as attorneys and professionals representing church-affiliated organizations, insurance companies and major creditors – primarily about 500 victims of clergy sexual abuse – to respond to any inquiries from Meghji and his team as they work over the next 45 days.
The judge ordered Meghji to complete his evaluation by October 9 and submit a public report of his findings by October 23.
In particular, she instructed Meghji to inquire about the status of two competing restructuring plans promised by the church and its creditors, to review the approximately $40 million in costs already incurred since the church filed for bankruptcy in 2020, and to determine whether the church had the “financial means” to “reorganize and continue operations.”
Grabill also asked Meghji to evaluate the archdiocese’s current administrative structure and processes, a key issue as some of the abuse victims have filed a petition with the court demanding the appointment of a trustee to remove Archbishop Gregory Aymond’s control of the archdiocese’s finances.
As WWL Louisiana and The Guardian exclusively reported, Aymond’s bankruptcy commissioner, Lee Eagan, testified in a series of depositions – including in July – that he approved the legal fees instead of the archdiocese’s in-house attorney, Susan Zeringue, because there was a “Chinese wall” between her and the Jones Walker law firm, which is representing the church in the case. Her husband, Wayne Zeringue, is a partner at Jones Walker.
Eagan also testified that he was mentally impaired as a result of a 2022 car accident and that he had done things to intentionally hinder settlement negotiations, leading to calls to replace Aymond, and by extension Eagan, with a trustee.
The archdiocese argues that the U.S. Constitution’s separation of church and state prevents a bankruptcy court from removing the archbishop or one of his appointees as head of church operations. But lawyers for the plaintiffs, who are guilty of sexual abuse, say the U.S. Constitution does not apply in this case.
“They want to have their cake and eat it too,” said one of those lawyers, Frank D’Amico. “They can file for bankruptcy protection, but then the court can’t order them to do things in bankruptcy? That doesn’t make sense.”
At a hearing Tuesday, Grabill turned down an offer from Vincent Liuzza, a New Orleans redevelopment expert, to serve as a court-appointed expert, saying she needed to bring in someone without local ties. Liuzza acknowledged in court Tuesday that his godson is a Catholic priest in the city’s archdiocese.
