Survivors of clergy abuse and others embroiled in the Roman Catholic archdiocese’s costly and lengthy bankruptcy reorganization have been invited to a national hearing to help resolve the unusual and controversial lawsuit. A recognized turnaround expert is concerned after being questioned about some of his actions in an unrelated court. case.
Judge Meredith Grabill’s chosen expert, Mohsin “Mo” Meghji, was recently the subject of a Wall Street Journal investigation into some of his schemes in the high-stakes bankruptcy restructuring of a pharmaceutical company. Ethical concerns were investigated.
Both the clergy abuse plaintiffs who have been fighting for compensation for years, and their supporters, have been told that after their side and the church each presented competing settlement offers to a judge, including: , did not want to speak on the record about the Journal’s investigation into Mr. Meghji for fear of embarrassing Mr. Grabill. A difference of hundreds of millions of dollars.
But Ken Rosen, one of the prominent bankruptcy lawyers who is not involved in either the New Orleans church case or the pharmaceutical issue, analyzed Megzi’s actions reported at the Guardian’s request, and which the magazine documented. He acknowledged that the content was “inappropriate behavior.”
The newspaper’s investigation found that Meghji, who is based in New York City, later hosted a lavish party for two bankruptcy judges who oversaw Sorrento Therapeutics’ Chapter 11 reorganization. Mr. Megzi then went to work for Sorrento, where he helped bring the drug company’s reorganization into court documents.
In fact, although Sorrento and its shareholders disagreed, one of the two judges, David Jones, ruled that Megzi’s M3 Partners had to pay tens of millions of dollars worth of money to employees and professional advisers. approved the loan. According to court filings reviewed by the Guardian, Megzi earned up to $225,000 a month in his role at Sorento, a multibillion-dollar company that went bankrupt and was effectively wound up.
Ms. Jones, coincidentally, consulted with Mr. Grabill before deciding to remove four clergy abuse victims from the committee representing the interests of survivors involved in the Archdiocese of New Orleans’ bankruptcy. Ta. A lawyer notified a local Catholic high school that its resident priest had admitted to sexually abusing teenagers. The girl on the last mission.
This is alarming how things work in our legal system
clergy abuse lawyer
It is unclear whether Mr. Grabill sought any input from Mr. Jones before appointing Mr. Meghzi as bankruptcy trustee for the Archdiocese of New Orleans on Aug. 21. Neither she nor Meghji responded to requests for comment.
Nevertheless, Megzi and Jones’ involvement in the Journal’s articles about Sorrento was enough for one clergy abuse lawyer to say, “I was not happy to read these reports.”
“It’s alarming that things work this way in our legal system,” said the lawyer, whose client was not involved in the commission’s dismissal ordered by Mr. Grabill.
Grabill brought Megzi, M3, and the national law firm of Latham & Watkins, with whom they frequently collaborate, into the archdiocese’s bankruptcy, killing the church and the people it owes a debt to, including 500 people. investigated the feasibility of two competing plans for reconstruction, including survivors of the clergy sexual abuse; He also reviewed the $40 million in costs already incurred since filing for bankruptcy in 2020 (the church estimated it could resolve the issue for about $7.5 million) and gave the archdiocese “financial guidance” to implement the bankruptcy. He instructed them to decide whether they could afford it. Reorganize the book.
The judge came to this choice after some abuse victims asked the court to appoint a trustee to strip Archbishop Gregory Aymond of control of the archdiocese’s finances, a move the archdiocese has violated. He argues and resists it. Separation of church and state built into the U.S. Constitution.
The plea comes after Mr. Aymond’s appointed bankruptcy attorney, Lee Egan, said in a series of depositions that Mr. Aymond lacked the relevant expertise for the job and that Mr. Aymond had been mentally impaired due to a 2022 car accident. This comes after The Guardian and Louisiana’s WWL exclusively reported that he had suffered from . . Mr. Egan also said he was intentionally sabotaging negotiations aimed at resolving settlements with clergy abuse victims and other creditors.
At a hearing prior to Megzi’s appointment, Grabill predicted that bringing in a rehabilitation expert would “give confidence” to the integrity of the case.
Lawyers for archdiocese affiliates, including local Catholic schools, balked, asking whether Mr. Grabill was effectively being paid a large sum of money to a consultant to carry out the tasks he was required to perform. Mr. Grabill rebuked those comments, deriding the church as “rich” for suddenly worrying about the costs of bankruptcy.
The judge has not ruled on whether to strip Aymond of control of the archdiocese’s finances.
“We had a special relationship.”
The Journal’s report detailed how Megzi knew Jones “both professionally and personally.” Not only did Mr. Megzi and his M3 Partners work on some of the bankruptcies overseen by Mr. Jones in Houston bankruptcy court, but in April 2022, Mr. Megzi and his M3 Partners worked on a “private soirée at New York’s fashionable Le Bernardin restaurant.” The same magazine also reported how invitations were distributed. , touted Jones and his colleague Christopher Lopez, who is on the Houston Bankruptcy Court bench, as guests of honor.
Afterward, Mr. Megzi and his associates hosted a party at the restaurant in honor of Mr. Jones, Mr. Lopez, and them. The restaurant previously advertised a chef’s tasting menu and wine pairings for $282 per person.
Rosen said Megzi’s use of the invitation was ethically inappropriate. “What Mo Megzi did was announce to the world, ‘If you file a case in Texas, we’re the realigners to talk to because we have a special relationship with these two judges.’ ” he said.
Mr. Rosen, who wrote a Bloomberg article on how lawyers can ethically network with bankruptcy judges, asked Mr. Jones and Mr. Lopez for permission to use their names in the same way Mr. Megzi did. He also argued that it was inappropriate to give him But Rosen said it’s unclear whether the judge did so.
Mr. Megzi’s familiarity with Mr. Jones played a role in San Diego-based Sorrento’s decision to file for bankruptcy in February 2023 amid financial and legal woes.
As chief restructuring officer, Mr. Megzi directed Sorrento to file for bankruptcy in Houston, along with other advisers, even though the company had never done business there. The newspaper reported that this was largely because Jones had a reputation for supporting law firms that represent bankrupt companies in court.
A shell company belonging to Sorrento then rented a mailbox in Houston, filed for bankruptcy in the Texas city, and even opened a local bank account so they could finally get in front of Jones. The move stems from legal advice from two law firms: Jackson Walker and Latham & Watkins.
The case was assigned to Jones after Sorrento filed for bankruptcy. Megzi went to a judge almost immediately and told him that M3 Partners, its employees and professional advisors needed to borrow $30 million from the drug company in order to do their job. The paper said Sorento and its shareholders objected to the loan and its high terms, but Mr. Jones overrode them and approved Mr. Megzi to borrow the money.
“I’ve watched Mr. Meghji deal with difficult situations,” Jones reportedly said, adding that turnaround experts have helped large companies such as Sears, Barneys, Vice Media and other troubled companies. He hinted at how he was leading a large-scale restructuring. “He says he needs it.”
Mr. Jones ultimately had to resign from the case and from the bankruptcy court altogether after a lawsuit revealed romantic relationships with attorneys representing numerous companies that were brought into the judge’s courtroom. The lawyer involved, Elizabeth Freeman, was also a partner at the Jackson Walker law firm that Sorrento employed.
Sorrento’s bankruptcy was reassigned to Lopez. And the drug company, which went bankrupt with reported assets of $1 billion, was nearly dissolved.
Lopez repelled attempts by Sorrento shareholders to investigate Freeman. He later refused to dismiss Sorrento’s bankruptcy, concluding that Sorrento’s lawsuit in Houston was the result of clever legal maneuvering rather than fraud, the Wall Street Journal noted. did.
The judge ruled after the lead lawyers in Megzi and Latham’s cases each gave sworn statements that they had no knowledge of Jones and Freeman’s affair before it became public knowledge in October 2023. I came to this conclusion.
“Did you fail again?”
Some of the names at the center of Sorrento’s bankruptcy saga are jarring to those owed money by the bankrupt Archdiocese of New Orleans.
As an example, Grabill has agreed to pay Megzi, M3 Partners and Latham & Watkins up to $350,000 for two months’ work, $100,000 of which has already been paid.
Grabill defended his decision, saying he would be willing to spend “a little more” of the archdiocese’s money, which would go towards settlements for victims of clergy abuse. This is because I believe in the “value” of having people like Meguji consider whether relief is possible. It should be more than a “carcass” that is divided at the end of the church’s bankruptcy.
Mr. Grabill chose Mr. Meghzi after rejecting an offer for the same job from Vincent Liuza, a business turnaround specialist in the New Orleans area.
Liuza acknowledged in court to Grabill that his godson is a Catholic priest in the Archdiocese of New Orleans. And Grabill said he chose to hire someone else because he needed to hire someone who had no ties to the local community or the Catholic Church.
Although the judge did not explicitly mention it, one of Meghzi’s top search results on Google was for a $1 million family trust he heads to establish a professorship in Shia Islamic studies at Florida International University. It was a May 2023 news release detailing the circumstances behind the donation.
But the relationship between Jones and Meghji obscures how much of an outsider the latter man really is.
Jones played a role in one of Grabill’s most controversial rulings during the bankruptcy, which disadvantaged a group of abuse victims whose lawyer had been one of the church’s harshest critics.
The lawyer, Richard Trahant, advised the principal of a Catholic high school in New Orleans — who happened to be his cousin — that the chaplain had serious taint in his past.
It was later revealed by news media that the pastor sexually abused a 17-year-old girl in the 1990s, something Trahant did not disclose due to a confidentiality order governing many records related to the church’s bankruptcy. I recognized it. However, the archdiocese largely escaped punishment for the pastor, citing a technicality in canon law that sets the age of majority at the time of the abuse to be 16.
As Archbishop of New Orleans, Aymond later had a chaplain stationed at Trahant’s cousin’s school.
Grabill ordered an investigation into how the information made headlines even though the bankruptcy records were sealed. And although Mr. Trahant at one point testified – without contradiction – that the investigation could not accuse Mr. Trahant of willfully or willfully violating the Bankruptcy Code’s confidentiality order, Mr. Grabill said that 40 It imposed a $10,000 fine, and its lawyers have since tried to overturn that sanction on appeal.
Additionally, Grabill expelled four clergy abuse plaintiffs, represented by Trahant and two of his co-counsels, from their involvement on a committee that advocates on behalf of the interests of sexual abuse victims in church bankruptcies.
Many legal commentators considered these punishments highly unusual, including those who would not speak publicly to avoid upsetting Grabill and potentially bringing the case before her.
Publicly available records of a status conference held before Grabill imposed sanctions show that she first consulted with two judges.
One of them, she said, was Mr. Jones.
The archdiocese sent a copy of the Journal article about Megzi but did not comment.
But another official involved in church restructuring said, “After reading about the Sorrento bankruptcy, and seeing that many of the same parties are now involved in the Archdiocese of New Orleans’ bankruptcy, survivors will be exposed once again to the worst possible consequences.” “Isn’t it natural to be worried that you might encounter something like this?”
