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HEARING DATE: OCTOBER 25, 2011 HEARING TIME: 10:00 A.M. TARTER KRINSKY & DROGIN LLP Attorneys for The Christian Brothers Institute, et al. Debtors and Debtors-in-Possession 1350 Broadway, 11th Floor New York, New York 10018 (212) 216-8000 Scott S. Markowitz, Esq. Eric H. Horn, Esq. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ------------------------------------------------------------------- x In re: : : THE CHRISTIAN BROTHERS INSTITUTE, et al. : : Debtors. : ------------------------------------------------------------------- x

Chapter 11 Case No.: 11-22820 (RDD) (Jointly Administered)

DEBTORS LIMITED OBJECTION TO THE MOTION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS FOR ENTRY OF AN ORDER PURSUANT TO BANKRUPTCY RULE 2004 AUTHORIZING EXAMINATIONS AND PRODUCTION OF DOCUMENTS TO: THE HONORABLE ROBERT D. DRAIN UNITED STATES BANKRUPTCY JUDGE The Christian Brothers Institute (CBI)1 and The Christian Brothers of Ireland, Inc. (CBOI),2 the above-captioned debtors and debtors-in-possession (individually a Debtor and collectively, the Debtors) hereby file this limited objection (the Limited Objection) to the motion of the Official Committee of Unsecured Creditors for entry of an order pursuant Rule 2004 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules) authorizing examination and production of documents (the Motion). In support of the Limited Objection,
1

The last four digits of CBIs employer identification number are 0153 and its mailing address is 21 Pryer Terrace, New Rochelle, New York 10804. 2 The last four digits of CBOIs employer identification number are 0603 and its mailing address is10001 S. Pulaski, Room 106, Chicago, IL 60655-3356.

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the Debtors respectfully represent as follows: PRELIMINARY STATEMENT 1. While the Debtors understand that the Committee has the right to seek discovery

pursuant to Bankruptcy Rule 2004, the scope of discovery has to be reasonable. Looking at the subpoenas attached to the Motion, many of the requests are simply unreasonable. That being said, it is the Debtors intention to comply with all reasonable requests to the best of their ability. In fact, prior to the filing of the Motion, the Debtors sent over 13,000 pages of requested discovery, including organizational charts, constitutions, meeting minutes, personnel files, insurance policies, Brother data sheets, litigation documents, and historical financial information dating back to the 1950s. 2. The Debtors are filing this Limited Objection to ensure that their right (as well as

other parties to be served with subpoenas pursuant to the Motion) to object to the Committees discovery requests are not compromised by the Motion and are otherwise preserved. GENERAL BACKGROUND 3. On April 28, 2011 (the Petition Date), the Debtors each commenced their

respective Chapter 11 case by filing a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code). Pursuant to 1107(a) and 1108 of the Bankruptcy Code, the Debtors continue to operate as debtors-in-possession. No trustee has been appointed. 4. The Debtors cases were consolidated for administrative purposes only, by order

dated May 2, 2011. Thereafter, by order dated May 18, 2011, the Debtors were authorized to retain Tarter Krinsky & Drogin LLP as bankruptcy counsel. 5. On May 11, 2011, the United States Trustee appointed an Official Committee of

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Unsecured Creditors (the Committee). The Committee retained Pachulski Stang Ziehl & Jones LLP as its counsel, which was approved by an order of this Court dated July 14, 2011. 6. CBI is a domestic not-for-profit 501(c)(3) corporation organized under

102(a)(5) of the New York Not-for-Profit Corporation Law. CBI was formed in 1906 pursuant to Section 57 of the then existing New York Membership Law. The Not-for-Profit Corporation Law replaced the Membership Law effective September 1, 1970. The purpose for which CBI was, and continues to be, formed was to establish, conduct and support Catholic elementary and secondary schools principally throughout New York State. As a not-for-profit corporation, its assets, and/or income are not distributable to, and do not inure to, the benefit of its directors or officers. CBI depends upon grants and donations to fund a portion of its operating expenses. 7. CBOI is a domestic not-for-profit 501(c)(3) corporation organized under the Not-

for-Profit Corporation Law of the State of Illinois. The purpose for which CBOI was, and continues to be, formed was to establish, conduct and support Catholic elementary and secondary schools principally throughout the State of Illinois, as well as other spiritual and temporal affairs of the former Brother Rice Province of the Congregation of Christian Brothers. As a not-forprofit corporation, its assets, and/or income are not distributable to, and do not inure to the benefit of its members, or officers. CBOI depends upon grants and donations to fund a portion of its operating expenses. 8. The cause for the filing of these cases has been extensively detailed in the affidavit

pursuant to Local Bankruptcy Rule 1007-2 filed with the original petitions, and is referred to as if fully set forth herein. In short, the Debtors Chapter 11 cases were filed in an effort to resolve in one forum, the onslaught of litigation and claims asserted by alleged sexual abuse plaintiffs against the Debtors.

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RELEVANT BACKGROUND 9. CBI and CBOI are relatively small organizations. Many of the Brothers are

elderly or infirm. The focus of their work is on teaching and helping impoverished communities or communities in need, primarily through education. For example, several Brothers teach at All Hollows High School in the Bronx, which is the poorest congressional district in the United States. The Brothers have a substantial presence in Bonita Springs, Florida assisting in the education of migrant farm workers. Brothers have also assisted Operation Helping Hands in rebuilding houses for displaced residents in New Orleans as a result of Hurricane Katrina. Many of the Brothers have full-time teaching positions at educational institutions, such as Iona Preparatory School and Iona College. The Debtors have an extremely limited administrative staff. 10. During the course of the various litigation commenced against CBI and other

Christian Brother entities, voluminous documents pursuant to various subpoenas or other requests have been provided. Many of those documents were produced to the same plaintiffs lawyers who are today representing individual members of the Committee in these cases. In fact, the Committee has received substantial documents from plaintiffs attorneys, as is evidenced by the substantial amount of detail set forth in the various pleadings filed by Committee counsel. 11. Despite the voluminous amounts of documentation that was produced during the

course of the litigations referenced above, the Committee as it is entitled to do issued an informal request for documentation, in or around August 2011 (the Informal Request). Included in that request, were sixteen (16) pages of information requests. Many of those

requests are unreasonable, overlapping and duplicative, and seek information dating back to 1940.

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12.

Since receiving the Informal Request, the Debtors have provided the Committee

in excess of 13,000 pages of discovery. For instance, on September 21, 2011, the Debtors provided the Committee with approximately 10,000 pages of documents, containing, among other things, organizational charts, constitutions, meeting minutes, personnel files and insurance policies. Subsequently, Brother data sheets, lists of schools where the Brothers had either taught or had significant involvement, and historical financial statements dating back to the 1950s were provided. The Debtors paraprofessionals have spent considerable time working with the

Committees document management company, e-Stet, to coordinate and make available documents in the format requested by the Committee. The Debtors continue to provide

documents to the Committees document management company on a rolling basis. 13. On or about September 28, 2011, the Committee filed the Motion for approval of

the issuance of subpoenas pursuant to Bankruptcy Rule 2004. While the Committee certainly has the right to do so, the Committee has to understand that the Debtors Chapter 11 cases are not commercial cases run by sophisticated individuals. The Debtors are for all practical purposes run by lay people. 14. That being said, it is certainly the Debtors intention to comply with all reasonable

information requests at the quickest speed they are able to do. But for the Committee to expect the amount of information it requested on an immediate basis is simply not reasonable.3 LIMITED OBJECTION 15. While the Debtors understand that the Committee certainly has the right to seek

discovery pursuant to Bankruptcy Rule 2004, the Debtors want to make sure that they retain the right to object, on any and all permissible grounds to such discovery requests. While the Motion
3

For example, many of the documents, such as financial statements and minutes of board meetings, exist in the archives and are only available in hard copies and often only one copy exists. As such, the documents must be organized and copied before being produced.

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does mention that the parties do preserve such rights, the order annexed thereto is silent to that effect. In that regard, the Debtors are filing this Limited Objection to ensure that their objections rights vis--vis the Committees discovery requests are preserved. 16. Accordingly, the Debtors respectfully request that any order entered by this Court

relative to the Motion expressly reserve the Debtors (as well as other parties to be served with subpoenas pursuant to the Motion) rights to object to the requests on any and all grounds permitted by law or otherwise. WHEREFORE, the Debtors respectfully request that this Court (i) not enter and order approving the Motion unless such order contains the reservation or rights set forth in paragraph 17 herein, and (ii) grant such other and further relief as is just and appropriate. Dated: New York, New York October 18, 2011 TARTER KRINSKY & DROGIN LLP Attorneys for The Christian Brothers Institute, et al. Debtors and Debtors-in-Possession By: /s/ Scott S. Markowitz Scott S. Markowitz Eric H. Horn 1350 Broadway, 11th Floor New York, New York 10018 (212) 216-8000

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