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Hearing Date: October 25, 2011 at 10:00 a.m. PATTERSON BUCHANAN FOBES LEITCH & KALZER, INC., P.S. 2112 Third Avenue, Suite 500 Seattle, Washington 98121 (206) 462-6700 Michael A. Patterson, NYSBA Reg. No. 3615283 Attorneys for the Corporation of the Catholic Archbishop of Seattle Party-In-Interest UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK : : : : : : : :

In re: THE CHRISTIAN BROTHERS INSTITUTE, et al.,

Chapter 11 Case No. 11-22820 (RRD) (Jointly Administered)

Debtor(s)

REPLY TO DEBTORS OBJECTION AND IN FURTHER SUPPORT OF MOTION FOR APPROVAL AND ENFORCEMENT OF SETTLEMENT AGREEMENT BETWEEN PLAINTIFFS AND THE ARCHDIOCESE AND DISMISSAL AS TO THE ARCHDIOCESE ONLY The Corporation of the Catholic Archbishop of Seattle (Archdiocese) respectfully submits this Reply to Debtors Objection and in further support of the Archdioceses motions (the Archdioceses Motions, Docket Nos. 105 and 107; Adv. Pro. Docket No. 16) for an order approving and enforcing a settlement agreement with Plaintiffs in the K.A., et al. and L.W., et al. Adversary Proceedings and dismissal as to the Archdiocese only. On October 20, 2011, The Christian Brothers Institute (CBI) and The Christian Brothers of Ireland, Inc. (CBOI) (collectively, Debtors) filed an objection to the Archdioceses Motion (Debtors Objection, Docket No. 136).1

All capitalized terms shall have the meaning ascribed to them in the Archdioceses Motion for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only.

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ARGUMENT Debtors contend that the Archdiocese should not be permitted to fund the Settlements with any proceeds from the applicable insurance policies. The Debtors are not named insureds on the policies at issue. Again, the Debtors have misled the Court by arguing that when a debtor corporation owns an insurance policy, it is implied that the policy and the proceeds of that policy are property of that debtors bankruptcy estate. See Debtors Objection, p. 9. At the same time, Debtors have repeatedly stated that they are not asserting ownership of the insurance policies, but in an abundance of caution have listed them as an interest. See Response of Official Committee of Unsecured Creditors (Committee) to Motion of the Catholic Archbishop of Seattle to Seek Determination of the Extent of 11 U.S.C. 362 Stay With Regard to Edmund Rice Congregation of Christian Brothers/North American Province, Exhibit A. The

Archdioceses interest and ownership of the insurance policies and proceeds is not at issue and does not affect the Debtors disputed interest in the remaining indemnity funds nothing precludes the Archdiocese from settling with funds which it indisputably owns. Debtors, as well as other parties, have questioned the Archdioceses standing in bringing its Motion. Although the Archdiocese has cited to and briefed the standards for approval of settlement agreements under Fed. R. Bankr. P. 9019, as the Committee pointed out, judicial approval is not needed when the settlement agreement is between non-debtor parties and does not implicate property or interests of the estates. The Archdioceses requested relief is quite simple: an Order that the claims as to the Archdiocese only, in the K.A., et al. and L.W., et al. Adversary Proceedings, be dismissed with prejudice and without costs or attorneys fees to any party. As a named defendant in the adversary proceedings as issue, the Archdiocese has 2

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requisite standing to move for dismissal based on the Settlement Agreements. For the same reasons above, the Archdioceses Motion was noted under Local Rule 9006-1(b) which provides that motion papers shall be served at least 14 days before the return date. Since judicial approval of the settlement is not required and the Archdiocese is merely requesting dismissal pursuant to the Settlement Agreements, the 21 days notice pursuant to Fed. R. Bankr. P. 2002(a)(3) is not required and bringing this motion under shortened time is unnecessary. CONCLUSION Based on the foregoing, the Defendant Archdiocese has satisfied their payment obligations under the Settlement Agreements which should be entirely enforced to include dismissal. WHEREFORE, Defendant Archdiocese respectfully requests that this Court enter an order granting the Defendant Archdioceses Motion for Approval and Enforcement of Settlement Agreement and Dismissal as to the Archdiocese Only and such other and further relief this Court deems just and proper. DATED this 23rd day of October, 2011. PATTERSON BUCHANAN FOBES LEITCH & KALZER, P.S., INC. __/s/ Michael A. Patterson______________ Michael A. Patterson, NYSBA Reg. No. 3615283 2112 Third Avenue, Suite 500 Seattle, Washington 98121 Telephone: (206) 462-6700 Facsimile: (206) 462-6701 Email: map@pattersonbuchanan.com Attorneys for the Corporation of the Catholic Archbishop of Seattle 3

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Party-In-Interest