Roman Catholic Episcopal Corporation of St. John's: dividing $3.2 million on the way out

The Roman Catholic Episcopal Corporation of St. John's has asked the Supreme Court of Newfoundland and Labrador to let it leave the CCAA for bankruptcy. Its application would lift the stay so the corporation can file an assignment in bankruptcy naming Ernst & Young Inc., its monitor since May 2022, as trustee; the CCAA would end, and the monitor be discharged, when the monitor files a certificate once the post-filing expenses are paid, per the Financial Administrator's affidavit, Oct. 23, 2026, p. 1 and the Twenty-Seventh Report of the Monitor, Oct. 22, 2026, paras. 3, 32, 41(a)–(b), (f).

EY's Twenty-Seventh Report, dated October 22, 2026, supports the application and recommends the rest of what the corporation seeks: a third interim distribution of $3.2 million to the accepted claimants, releases for the Archbishop of St. John's and a list of others, approval of the monitor's activities and fees, and an extension of the stay to the moment the CCAA ends. On how the $3.2 million should be divided it makes no recommendation. It sets out two methods, one of which would take account of what claimants have received from the Province's settlement, and "requests guidance from this Honourable Court with respect to which distribution methodology the Court prefers," per the Twenty-Seventh Report, paras. 19, 24, 61.

What happened after June

When the case was last reported here, on June 21, the move to bankruptcy was waiting on one claimant's motion against the $10,000 sale of the estate's unsold religious articles to the Archdiocesan Renewal Corporation, or ARC. Justice Garrett A. Handrigan heard the motion on June 24 and dismissed it on July 6. The appraisal the claimant filed, which gave a fair market value of $34,780, was "decidedly unhelpful," the reasons say: it did not list the items examined, give comparative data or say how its values were reached. If anything, the reasons continue, its summary nature bore out the logistical problems the Archdiocese's financial administrator had described, that "the articles are too numerous, they are too widely distributed and they are too disparate to lend themselves to rigorous collation and accurate valuation," per Roman Catholic Episcopal Corporation of St. John's (Re), 2026 NLSC 84, July 6, 2026, p. 1, paras. 47–51, 60.

The court was satisfied that $10,000 "is a fair price for those assets," and approved the sale of the articles together with the corporation's reversionary interest in its leases of them to the entities that bought church buildings they intend to operate as Catholic churches, per 2026 NLSC 84, paras. 56, 60. On July 8 the Province made the payments under the settlement the court had approved on April 30, which provided for an aggregate cash payment of up to $45.8 million to affected claimant group members, per the Twenty-Seventh Report, para. 16. ARC bought the corporation's interest in the articles and in the leases for $10,000 on July 14, according to the Financial Administrator's affidavit, para. 14.

What the estate still holds

At the start of the CCAA the corporation comprised 34 parishes across the Avalon and Burin Peninsulas, which held at least 139 properties, "including churches, rectories, halls, vacant land and cemetery lands," the Financial Administrator's affidavit says. A court-approved tender process in the St. John's region, it says, sold 42 of them at a value of $20.6 million, and by September 17, 2026 the corporation had sold 132 properties, with net sale proceeds of $32,813,517, per the Financial Administrator's affidavit, paras. 6–8.

The report counts seven properties still held at that date: two under agreements of purchase and sale, and five listed with realtors, one with a building and four parcels of raw land. Whatever is not sold during the CCAA, the report says, "will vest in the hands of the Trustee in Bankruptcy." Cash in the operating account and the property trust account at McInnes Cooper totalled $4.2 million at September 30, per the Twenty-Seventh Report, paras. 9, 11, 14.

Two ways to divide $3.2 million

Two interim distributions had brought every accepted claimant to 30.23189% of a proven claim, other than four deceased estate claims still awaiting satisfactory testamentary documentation, the report says; the corporation has paid $36.5 million and reserved $0.2 million pending that documentation. The Settlement Agreement with the Province gave differing percentage recovery awards to different claim categories, so that, by the report's account, recoveries through the CCAA range from 30.23189% to 92.79375% of each claimant's award, depending on the category each falls into, per the Twenty-Seventh Report, paras. 15, 17. From the $4.2 million it holds, after reserves agreed with the monitor and Representative Counsel, the corporation proposes a third interim distribution of $3.2 million, per the Twenty-Seventh Report, para. 18.

The first method the report sets out, the Pro Rata Methodology, would distribute the $3.2 million pro rata to all accepted claimants on their net Claims Officer awards, raising their recoveries to between 32.9% and 95.4% of those awards. It does not consider the Provincial Settlement payments, "which were obviously not contemplated within the Claims Officer's Determinations"; they would not reduce a claimant's provable claim, subject only to the requirement that no claimant recover more than 100 cents on the dollar from all sources. The second, the Narrowing Methodology, would pay the money "to the lower-percentage recovery recipients to narrow the distribution recovery gap percentage." Under it 114 individuals would share the $3.2 million, and the range of CCAA recoveries would narrow to between 40.9% and 92.8%. Its premise, in the report's words, is that "Accepted Claimants receiving outside awards should not be advantaged or disadvantaged by the timing of those awards," per the Twenty-Seventh Report, para. 19.

The report ties the second method to the claims protocol. Sections 3.1.6 through 3.1.8 of the Abuse Claims Protocol, it notes, contemplate deductions for prior distributions in other insolvency proceedings, and for other awards or settlements, in fixing each net award. Because the Provincial Settlement was not contemplated when the protocol was approved, and given its materiality, the report says, the court "may consider exercising the discretion available under section 11 of the CCAA" to have this distribution and any later ones take the settlement payments into account, per the Twenty-Seventh Report, para. 19(b).

To show why, the monitor works through three theoretical claimants, each with a $500,000 Claims Officer award. One has received nothing outside the interim distributions. A second received a $200,000 prior award before the CCAA, which cut the net award to $300,000; a third received $200,000 from the Provincial Settlement. Paid 30.2% of each net claim through the CCAA, the three stand at 30.2%, 58.1% and 70.2% in the report's first illustration. The third recovers more than the second, the report says, because the third claimant's CCAA distributions were calculated on the gross claim, and the claimant with the earlier award "has recovered 12.1% less compensation to date"; leaving the settlement out of account also reduces the recovery of the claimant who was not eligible for it by 5.5%. In the second illustration, with the settlement deducted, the same $392,600 would leave the three at 35.7%, 61.4% and 61.4%, per the Twenty-Seventh Report, paras. 20–22.