Diocese of Alexandria - Chapter 11 Plan Terms

Plan Terms

Overview

• The Diocese of Alexandria, as debtor and debtor in possession, proposes the Plan pursuant to Section 1121(a) of the Bankruptcy Code for the resolution of outstanding Claims against the Debtor, and is a proponent of the Plan within the meaning of Section 1129 of the Bankruptcy Code.
  • The Diocese serves a Region consisting of 11,108 square miles in Central Louisiana.
  • The Official Committee of Unsecured Creditors (the “Committee”) was appointed in the Chapter 11 Case on November 21, 2025.

Toggle Plan Mechanism

• The Plan provides a two-track confirmation structure (the “Release Plan Toggle” and the “Liquidation Value Plan Toggle,” and together, the “Toggle Plan Mechanism”), for the express purpose of providing a single mechanism by which the Plan may be confirmed based on whether the conditions for the Release Plan Toggle have been satisfied, without requiring plan amendment, re-solicitation, or re-balloting.
  • The Release Plan Toggle shall apply to all Holders of Class 5 Claims if, and only if, the Release Plan Toggle Conditions have been satisfied or waived in accordance with Article 4.03.
  • If the Release Plan Toggle Conditions have not been satisfied or waived as of the commencement of the Confirmation Hearing, the Liquidation Value Plan Toggle shall apply automatically to all Holders of Class 5 Claims without further order of the Bankruptcy Court.
• The Release Plan Toggle Conditions, each of which must be satisfied or waived in accordance with Article 4.03, consist of:
  • Each Participating Catholic Entity listed on Exhibit C has executed and delivered a PCE Joinder;
  • The Former Alexandria Parish Cash Contribution has been finalized, documented in writing on file with the Bankruptcy Court no later than the Disclosure Statement Hearing, and is unconditionally payable on the Effective Date;
  • Each insurer settlement agreement necessary to assign the Assigned Insurance Interests to the Plan Trust has been fully executed and, to the extent Bankruptcy Court approval is required, approved by a Final Order; and
  • No Holder of a Class 5 Claim has affirmatively opted out of the Third-Party Release in accordance with Article 9.05, as reflected in the final voting tabulation or as otherwise determined by the Bankruptcy Court.

Funding the Plan

• The Debtor shall fund distributions to Classes 1 through 4 with Cash, including but not limited to Cash from operations and obtaining lender financing.
• Under the Release Plan Toggle, funding to the Plan Trust for Class 5 and Class 6 is provided through the Settlement Payment—the total Cash funding obligation to the Plan Trust on behalf of the Debtor and the Alexandria Parishes, in the amount of $5,400,000.00—comprised of:
  • $3,000,000.00 in Cash, payable by the Reorganized Debtor on the Initial Plan Funding Date (as the same may be reduced pursuant to Article 4.03(e)); and
  • The Plan Trust Note in the initial principal amount of $2,400,000.00, executed on the Initial Plan Funding Date, payable to the Plan Trust, continuing for a period of three years from the Initial Plan Funding Date, bearing no interest, and secured by a mortgage on the Plan Trust Note Collateral.
  • In no event shall the aggregate Settlement Payment (Cash plus Plan Trust Note) be reduced below the Liquidation Value.
• On the Effective Date or as soon as practicable thereafter, the PCE Cash Contributions (if any) and the Former Alexandria Parish Cash Contribution shall be paid to the Plan Trust by the contributing Participating Catholic Entities or Former Alexandria Parishes (or on their behalf).
  • The Former Alexandria Parish Cash Contribution shall be not less than $300,000.00 in the aggregate (with any non-Cash property valued at Fair Market Value for purposes of this minimum), or such greater amount, and in such form and with such timing, as the Former Alexandria Parishes, the Committee, and the Future Claims Representative may agree, as set forth in the Plan Supplement.
• For so long as the Plan Trust Note remains outstanding, the Diocese shall transfer Future Bequests to the Plan Trust on the terms set forth in the definition of “Future Bequests.”
• For purposes of the Release Plan Toggle only, the Cash payment and Plan Trust Note shall be reduced, on a dollar-for-dollar basis, by the aggregate amount of Attorney Fee Claims incurred on or after April 1, 2026, regardless of when such Claims are Allowed or payable; any such reduction is applied first to the Cash portion, with the Plan Trust Note principal remaining $2,400,000 so long as the Liquidation Value floor is maintained; provided that in no event shall such reductions cause the total Settlement Payment (Cash plus Plan Trust Note) to be less than the Liquidation Value.
• Under the Liquidation Value Plan Toggle, on the Initial Plan Funding Date the Reorganized Debtor shall pay to the Plan Trust consideration in an aggregate amount equal to the Liquidation Value, satisfied at the Debtor’s sole and absolute discretion in:
  • Cash;
  • Real Property credited at Fair Market Value;
  • A non-interest-bearing promissory note payable in equal annual installments over not more than five years and secured by a mortgage on the Plan Trust Note Collateral; or
  • Any combination of the foregoing.
• The Liquidation Value means $4,825,000, or such other amount as the Bankruptcy Court determines is required to satisfy Section 1129(a)(7) of the Bankruptcy Code with respect to Holders of Allowed Class 5 Putative Abuse Survivor Claims.

The Plan Trust

• The Plan Trust is the trust created for the benefit of Holders of Class 5 Claims and Class 6 Future Claims pursuant to the Plan Trust Agreement and in accordance with the Plan and Confirmation Order.
  • The Plan Trust shall be established pursuant to the Plan Trust Agreement and formed and funded with the Plan Trust Initial Funding and Plan Trust Payments, with the Holders of Class 5 Claims and Class 6 Claims as beneficiaries, including the Future Claims Reserve, as applicable.
  • The Plan Trust Note is a promissory note in an original principal amount equal to $2,400,000.00, to be executed by the Reorganized Debtor and made payable to the Plan Trust as part of the Settlement Payment, secured by the Plan Trust Note Collateral (the collateral commonly known as the Diocesan Office and more fully described in Exhibit F).
• The Plan Trustee shall actively pursue recoveries from the Assigned Insurance Interests transferred to the Plan Trust for the benefit of the Allowed Putative Abuse Survivor Claims and the Allowed Future Claims.
• The Plan Trust shall terminate after its liquidation, administration, and distribution of the Settled Plan Trust Assets or Liquidated Plan Trust Assets in accordance with the Plan and its full performance of all other duties and functions.

Insurance

• Subject to Article 4.03, the collective Assigned Insurance Interests shall be automatically, and without further act or deed, assigned and transferred to the Plan Trust on the Effective Date (the “Insurance Assignment”).
  • The Insurance Assignment shall not be construed as an assignment of the Subject Policies, but rather as an assignment of the Debtor’s and, if applicable under the Release Plan Toggle, the Participating Catholic Entities’ rights and interests in the Subject Policies, in each case solely to the extent necessary for the Plan Trust to pursue and receive proceeds and remedies on account of Putative Abuse Survivor Claims and related coverage defenses and issues, notwithstanding any anti-assignment provision.
  • If the Liquidation Value Plan Toggle applies, the only Assigned Insurance Interests shall be the Assigned Reorganized Debtor Insurance Interests, and no assignment of the Assigned Participating Catholic Entities Insurance Interests shall occur.
• The Subject Policies mean any contract of insurance in effect on or before the Effective Date issued or allegedly issued by any insurance company or insurance broker to or for the benefit of the Debtor, for which coverage might exist for a Putative Abuse Survivor Claim.
• A Settling Insurer is any Insurer that has entered into a settlement agreement with the Debtor or the Plan Trustee, approved by the Bankruptcy Court pursuant to Bankruptcy Rule 9019, resolving such Insurer’s obligations under one or more Subject Policies in exchange for a lump-sum cash payment to the Plan Trust.
• The Assumed Insurance Policies are the Insurance Policies deemed assumed and assigned to the Reorganized Debtor, or otherwise continued in accordance with their terms, on the Effective Date pursuant to Article 6.02.

Future Claims

• The Future Claims Representative is the Person or Entity appointed by the Bankruptcy Court to represent the interests of the Holders of Future Claims, including for actions to be taken on behalf of Future Claims under the Plan.
• The Future Claims Reserve is the segregated portion of the Plan Trust reserved for the limited purpose of paying Holders of Class 6 Future Claims, equal to:
  • $150,000.00; plus
  • 0.5% of any net recoveries from the Assigned Insurance Interests.
• Future Bequests mean, for so long as the Plan Trust Note is outstanding, 50% of each unrestricted bequest or donation of at least $5,000 in which the rights of the Diocese vest during the period commencing on the Effective Date and continuing for so long as the Plan Trust Note remains outstanding, limited to the portion actually received by the Diocese.

Classification and Treatment of Claims

• Class 1 – Southern Heritage Bank Secured Claim: On the Effective Date, or as soon as reasonably practicable thereafter, Southern Heritage Bank shall retain its Lien on the Southern Heritage Bank Loan Collateral, as amended by a written agreement between the Reorganized Debtor and Southern Heritage Bank providing for payment of the Allowed Southern Heritage Bank Secured Claim in full and preservation of its existing Lien.
• Class 2 – Sabine State Bank Guarantee Claim: On the Effective Date, or as soon as reasonably practicable thereafter, the Debtor’s guarantee under the Sabine State Bank Guaranty Agreement shall be modified so that the guaranty shall not be enforceable against the Debtor or the Reorganized Debtor:
  • For so long as the Plan Trust Note is outstanding; and
  • Unless and until Sabine State Bank has first (1) fully and finally exhausted all rights and remedies against the borrower and (2) exhausted all rights and remedies against any and all collateral securing the borrower’s obligations.
• Class 3 – General Convenience Claims: Each Holder shall receive, at the election of the Debtor or Reorganized Debtor, payment of 95% of its Allowed General Convenience Claim in Cash or treatment consistent with Section 1129(a)(9) of the Bankruptcy Code, either on or before 60 days following the Effective Date or on the date due in the ordinary course of business.
• Class 4 – General Unsecured Claims: Each Holder that is not a General Convenience Claim shall receive, at the election of the Debtor or Reorganized Debtor, payment of 25% of its Allowed General Unsecured Claim in Cash, either on or before 120 days following the Effective Date or on the date due in the ordinary course of business.
• Class 5 – Putative Abuse Survivor Claims: Each Holder shall receive its pro rata share, pursuant to the Allocation Protocol, of the Plan Trust — comprised of the Settled Plan Trust Assets if the Release Plan Toggle applies, or the Liquidated Plan Trust Assets if the Liquidation Value Plan Toggle applies — in each case reduced by the Future Claims Reserve, as applicable, and net of the Plan Trustee’s costs of administering the Plan Trust. For the avoidance of doubt, under the Liquidation Value Plan Toggle, Holders shall be entitled solely to their pro rata share of the Liquidation Value and any net recoveries from the Assigned Reorganized Debtor Insurance Interests, and shall not be entitled to any portion of the Settlement Payment, any Assigned Participating Catholic Entities Insurance Interests, any PCE Cash Contribution, any Former Alexandria Parish Cash Contribution, any Future Bequests, or any other consideration available only under the Release Plan Toggle.Class 6 – Future Claims: Each Holder shall receive a Claim against the Plan Trust for its pro rata share of the Future Claims Reserve, subject to the claims of the Plan Trustee for costs of administering the Future Claims Reserve.
• Class 7 – Non-Abuse Litigation Claims: The Holder shall be entitled to litigate such non-Abuse Litigation Claim against the Reorganized Debtor, and such litigation will not be stayed or enjoined; provided that such Holders may only recover to the extent of the applicable Assumed Insurance Policy.
• Class 8A – Abuse Related Contribution Claims Related to Class 5 Claims: In full and final satisfaction of, and in exchange for, such Abuse Related Contribution Claim, (a) any Holder that is a Participating Catholic Entity shall be deemed to have waived its Class 8A Claim against the Debtor, the Reorganized Debtor, the Estate, and the Plan Trust — such waiver being, under the Release Plan Toggle, in exchange for both the Debtor Release and the Third-Party Release, or, if the Liquidation Value Plan Toggle applies, in exchange for the Debtor Release only (with no Third-Party Release); and (b) any Holder that is not a Participating Catholic Entity shall have its Class 8A Claim Disallowed under Section 502(e)(1)(B) of the Bankruptcy Code, while remaining entitled to the judgment reduction and Allocable Share credit provided in Article 9.12(b).
• Class 8B – Abuse Related Contribution Claims Related to Class 6 Claims: Holders receive treatment identical to Class 8A, applied to Abuse Related Contribution Claims arising out of a Class 6 Claim.

Debtor Release

• The Debtor Release, set forth in Article 9.04, is unconditional and applies irrespective of whether the Release Plan Toggle or the Liquidation Value Plan Toggle applies, and irrespective of whether any Holder of a Claim is a Releasing Party.
• The Debtor Release is separate from, and in addition to, the Third-Party Release set forth in Article 9.05, which is conditioned upon the Release Plan Toggle and applies only with respect to Releasing Parties.

Third-Party Release

• The Third-Party Release, set forth in Article 9.05, shall become effective only under the Release Plan Toggle.
  • If the Liquidation Value Plan Toggle applies, no Third-Party Release of any Participating Catholic Entity shall become effective as to any Holder of any Claim.
• A Holder of a Claim allowed to vote on the Plan who receives notice of the Third-Party Release and the opt-out release form in accordance with the Solicitation Procedures Order, and who (a) timely returns a ballot voting for the Plan; (b) timely returns a ballot voting against the Plan without affirmatively opting out of the Third-Party Release; or (c) fails to return a ballot and does not affirmatively opt out, shall be deemed to have consented to the release.
  • A Holder allowed to vote will not be subject to the release if such Holder affirmatively opts out of the release set forth in Article 9.05.
• Each PCE Cash Contribution and each Former Alexandria Parish Cash Contribution constitutes good and valuable consideration in exchange for the releases provided in Article 9.05, and each such contribution is made in reliance upon that provision.

Released and Releasing Parties

• The “Released Parties,” each in its capacity as such, include: the Debtor; the Reorganized Debtor; the Estate; each Participating Catholic Entity; the Committee and its members; the Plan Trustee; the Future Claims Representative; and each Related Entity of the foregoing.
  • Any Holder of a Claim that is not a Releasing Party shall not be a Released Party, and any individual accused of Abuse shall not be a Released Party solely to the extent such individual is named or sued in his or her individual capacity and the relief sought is to impose personal liability against such individual.
• The “Releasing Parties,” each in its capacity as such, include: the Debtor; the Reorganized Debtor; the Participating Catholic Entities; the Estate; the Committee; the Plan Trustee; the Future Claims Representative; the Retained Professionals; all Holders of Claims who became Releasing Parties by satisfying the affirmative consent requirements of Article 9.05; and each Related Entity of the foregoing.
• The “Protected Parties” are the Debtor, the Reorganized Debtor, the Estate, the Plan Trust, and the Plan Trustee, and, solely if and to the extent the Release Plan Toggle applies, each Released Party and each Participating Catholic Entity (and their respective Related Entities).

Exculpation

• The “Exculpated Parties” are, collectively, the Debtor, the Estate, the Plan Trustee, the Future Claims Representative, the Committee, and each member of the Committee in his, her, or its official capacity, in each case solely for conduct within the scope of their duties in connection with the Chapter 11 Case and the negotiation, formulation, preparation, dissemination, solicitation, confirmation, consummation, or implementation of the Plan, the Plan Trust Agreement, and any related agreements, instruments, or documents.

Discharge and Channeling Injunction

• The Channeling Injunction is the injunction imposed pursuant to Article 9.07 of the Plan.
• Except as otherwise expressly provided in the Plan or the Confirmation Order, on the Effective Date, pursuant to Section 1141(d) of the Bankruptcy Code, the Debtor shall be discharged from any Claim that arose prior to the Effective Date, and all Persons holding or asserting a Discharged Claim shall be permanently stayed, enjoined, and restrained from asserting or enforcing any Discharged Claim, including by:
  • Commencing or continuing any action or proceeding with respect to any Discharged Claim against the Debtor, the Reorganized Debtor, or property of the Reorganized Debtor;
  • Seeking the enforcement, attachment, collection, or recovery of any judgment, award, decree, or Order with respect to any Discharged Claim;
  • Creating, perfecting, or enforcing any encumbrance or lien with respect to any Discharged Claim;
  • Asserting any setoff, right of subrogation, or recoupment against any obligation due to the Reorganized Debtor with respect to any Discharged Claim; and
  • Taking any act that does not conform to or comply with the provisions of the Plan.
• Upon entry of the Confirmation Order, all Entities holding Claims that are settled under the Plan, released under Article 9.04 or 9.05, exculpated under Article 9.06, or otherwise discharged are permanently enjoined from commencing or continuing any action, enforcing any judgment, creating or enforcing any encumbrance, or asserting any setoff, subrogation, or recoupment against, as applicable, the Debtor, the Reorganized Debtor, the Released Parties, and/or the Exculpated Parties on account of such Claims.
• If the Liquidation Value Plan Toggle applies, the Channeling Injunction shall not enjoin actions against any Participating Catholic Entity or its Related Entities, but shall continue to apply in full to any Settling Insurer and to the Debtor, the Reorganized Debtor, the Estate, the Plan Trust, and the Plan Trustee. Nothing in Article 9.07 enjoins any direct, non-derivative claim that a Non-Releasing Party may assert against a Participating Catholic Entity or Non-Settling Party, except to the limited extent necessary to give effect to the Channeling Injunction as applied to Settling Insurers.

Conditions Precedent to the Effective Date

• The Plan shall not become effective unless and until each condition has been satisfied in full or, in the alternative, waived by the Debtor, including:
  • As a component of the Release Plan Toggle Conditions, and solely if the Release Plan Toggle applies, the Former Alexandria Parish Cash Contribution and the PCE Cash Contribution, if any, shall have been finalized, documented in writing on file with the Bankruptcy Court, and incorporated into the Plan Supplement no later than the Disclosure Statement Hearing (this condition is inapplicable if the Liquidation Value Plan Toggle applies and may not otherwise be waived by the Debtor or any other party); and
  • The appointment of the Plan Trustee shall have been approved by Order of the Bankruptcy Court.
  • The Bankruptcy Court shall have entered the Confirmation Order (as a Final Order);
  • The Debtor shall have received all necessary Canon Law approvals to pursue Confirmation of the Plan;
  • The Plan and all Plan Supplement documents shall have been executed and/or filed with the Bankruptcy Court;
  • No court or governmental authority shall have issued an order materially prohibiting consummation of the Plan or the Restructuring Transactions;
  • All professional fees and expenses of Retained Professionals approved by the Bankruptcy Court shall have been paid in full;
  • The Plan Trust shall have been formed;

Revocation or Withdrawal of the Plan

• Inadequate Releases — if, in its sole and absolute discretion and without regard to any numeric, percentage, or proportional threshold, the Debtor determines that the level of consensual Third-Party Releases obtained from Holders of Putative Abuse Survivor Claims is inadequate to effectuate the purposes of the Plan;
• The Debtor reserves the right to withdraw the Plan, each exercisable in its sole and absolute discretion, including on the following grounds:
  • Inadequate PCE Participation — if, without regard to any numeric, percentage, or proportional threshold, the Debtor determines that the level of PCE Cash Contributions, PCE assignments of Subject Policy interests, or other Participating Catholic Entity participation is inadequate to effectuate the purposes of the Plan;
  • Excess Liquidation Value — if the Bankruptcy Court determines at confirmation that the amount required to satisfy Section 1129(a)(7) of the Bankruptcy Code with respect to Holders of Allowed Class 5 Putative Abuse Survivor Claims exceeds $4,825,000; and
  • Fiduciary Out — if the Debtor determines in good faith, after consultation with counsel, that continued pursuit of the Plan would be inconsistent with its fiduciary duties under applicable law or its obligations as a debtor-in-possession under the Bankruptcy Code.

Judgment Reduction and Contribution Bar

• From and after the Effective Date, no Non-Settling Party (or any other Person) may commence or pursue any Abuse Related Contribution Claim against any Protected Party, and each Protected Party is released and discharged, to the fullest extent permitted by law, from all contribution, indemnity, subrogation, or reimbursement liability arising from any Abuse Claim or Putative Abuse Survivor Claim.
• If a Holder of an Abuse Claim or Putative Abuse Survivor Claim obtains a judgment, award, verdict, or settlement against a Non-Settling Party, the amount recoverable shall be reduced and credited by the Allocable Share, so that the Non-Settling Party is liable only for its own several share of the Holder’s damages and bears no portion attributable to the Protected Parties.
• The contribution bar and judgment reduction protecting the Debtor, the Reorganized Debtor, the Estate, the Plan Trust, and the Plan Trustee apply irrespective of which Toggle applies; the protections extend to the Released Parties and Participating Catholic Entities only if and to the extent the Release Plan Toggle applies.
• Nothing in Article 9.12 releases, enjoins, or reduces any Holder’s direct claim against a Non-Settling Party for that party’s own several share, and nothing therein applies to any Claim, right, or defense of any Insurer (governed solely by Article 6.03).