Diocese of Norwich seeks OK to use cash collateral of People’s United

By Sarah Lizee

Olympia, Wash., Aug. 10 – Norwich Roman Catholic Diocesan Corp., known as the Roman Catholic Diocese of Norwich, is seeking court approval to use the cash collateral of People’s United Bank, NA, according to court documents filed Tuesday with the U.S. Bankruptcy Court for the District of Connecticut.

The debtor is seeking consensual use of cash in some deposit accounts located at People’s United. However, the debtor disputes that the cash in the deposit accounts constitutes cash collateral.

A stipulation was drafted to allow for the debtor’s immediate and continued use of the cash in the deposit accounts in the ordinary course, including a deposit account designated as “medical account,” which is used for the purpose of paying insurance premiums for health care coverage for non-debtor employees and clergy along with the debtor’s employees and clergy.

The bank asserts that it holds a first priority security interest in and right to set off the deposit accounts, including the medical account. The debtor disputes these assertions.

The debtor and People’s United have agreed to the use of the deposit accounts, with adequate protection provided to the bank, but only to the extent of the validity, priority and extent of its liens on the deposit accounts as of the petition date and the granting of any protections subject to debtor’s reservation of rights and remedies to contest.

The Norwich, Conn.-based diocese filed bankruptcy on July 15 under Chapter 11 case number 21-20687.

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