IN RE: Roman Catholic Archbishop of Baltimore (2026)

Chapter 11

INTERIM ORDER AUTHORIZING DEBTOR TO USE PROPERTY IN THE ORDINARY COURSE OF BUSINESS SUBJECT TO CERTAIN CONDITIONS

A traditional, for-profit chapter 11 debtor is authorized to operate its business as a debtor in possession, subject to certain restrictions. One such restriction is a requirement that the debtor seek court approval before using, selling, or leasing its property out of the ordinary course of business. Thus, for example, a debtor may not sell substantially all its assets—or even a material operating division—without notice and a hearing and, in turn, court approval. The key factors here are what is being done (use, sale, or lease) and whether it concerns the debtor's (or estate) property.¹

The case before the Court is anything but traditional. It involves a nonprofit religious organization that is governed by Canon Law, Maryland Law, and the Bankruptcy Code.² The debtor itself is a creature of Maryland Law and distinct from related individuals, parishes, and schools. And the structure of the debtor and these individuals, parishes, and schools, as well as the three separate bodies of law, make the situation appear more complex than it actually is.

At its core, this case involves a Maryland corporation sole, which is distinct from the archbishop as the ordinary of the archdiocese,³ parishes, and schools. It concerns the debtor's property and claims against that property. The Court must maintain its focus on that property and those claims. It must discern what is required by the Code and in the best interests of the debtor and all creditors of the debtor's estate.

For the reasons set forth below, the Court will authorize the debtor to continue to use its property to provide services to the nondebtor parishes and schools in the ordinary course of business, subject to certain disclosure requirements and limitations on the use of certain transaction proceeds. The Court enters this Order on an interim basis and will evaluate its implementation before entering a final Order.

I. Relevant Background

The Roman Catholic Archbishop of Baltimore (the “Debtor”) filed a petition for relief under chapter 11 of the Code on September 29, 2023.⁴ Case No. 23-16969, ECF 1. The Debtor filed this case in response to the Maryland Child Victims Act (the “CVA”), passed by the Maryland General Assembly in April 2023. The CVA abrogated the statute of limitations on civil lawsuits involving child sexual abuse. Shortly after the petition date, the U.S. Trustee appointed the Official Committee of Unsecured Creditors (the “Committee”). ECF 81. The creditors serving on the Committee are all survivors of child sexual abuse (the “Survivors”) who assert claims against the Debtor.

The Debtor, the Committee, and the Debtor's insurance carriers (the “Insurers”) have been engaged in this case and participating in mediation. ECF 705. Although some agreements have been reached, progress has been slow and intermittent. Most recently, the parties have engaged in certain litigation before the Court. The pending matter is one example.

The Debtor filed its Emergency Motion for Entry of Interim and Final Orders Authorizing the Debtor to (I) Continue Providing Real Estate Advisory Services, (II) Continue Collecting Elements of Cathedraticum in Connection with Real Estate Advisory Services, and (III) Granting Related Relief (the “Emergency Motion”) on April 7, 2026. ECF 2196. The Emergency Motion responds, at least in part, to the Committee's allegations in an adversary proceeding in which the Committee requested, and the Court granted, a preliminary injunction against the Debtor. Adv. Pro. 26-00041 (the “Adversary Proceeding”), ECF 1, 22. The Court held an evidentiary hearing on the Emergency Motion, certain pending matters in the Adversary Proceeding, and all related papers (collectively, the “Pending Matters”) on April 16, 20, and 21, 2026 (the “Hearing”).⁵ This particular matter is now ripe for interim resolution.⁶

II. The Emergency Motion and Preliminary Key Findings of Facts 7

The Emergency Motion addresses what the Debtor asserts are ordinary course business transactions between the Debtor and its affiliated nondebtor parishes and schools, specifically services provided by the Debtor relating to real estate transactions. The Committee argues that these services are just part of a much larger series of out of the ordinary course transactions, namely the Debtor's “Seek the City to Come” (“Seek the City”) initiative.⁸ The Committee posits that Seek the City implicates estate property and should be subject to Court oversight and approval under section 363(b) of the Code. The Debtor disagrees with this characterization of Seek the City and counters that Canon Law, the First Amendment of the U.S. Constitution, and the Code preclude this Court from intervening.⁹

The Debtor offered the testimony of Bishop Adam Parker in support of its positions on the Pending Matters, and the Committee called one witness, Mr. John Matera.¹⁰ The Court found both witnesses credible and forthcoming in their testimony.

Bishop Parker explained his various roles and how those roles interact with the Debtor, Archbishop Lori, and the Debtor's nondebtor affiliates. Hrg. Rec. 1, at 10:39:05–10:52:00. Based on his descriptions, the Court determines that Bishop Parker has firsthand knowledge of the Debtor's operations and the facts most relevant to the Pending Matters.¹¹

According to Bishop Parker's testimony, the Debtor and each of the nondebtor affiliates are separate corporate entities under civil law.¹² Hrg. Rec. 1, at 10:41:46. Each entity has its own officers and constituent documents. See, e.g., ECF 2216, Exs. 4–6; Hrg. Rec. 1, at 11:08:25–11:18:00.¹³ The Court notes that Archbishop Lori (in his capacity as the ordinary of the archdiocese) and Bishop Parker (as vicar-general) serve as the President and Vice President, respectively, of each nondebtor parish. Id. The other officers of those entities are typically the pastor and two lay persons. From the documentary evidence, each corporate entity follows applicable state law governance and procedures, including with respect to corporate transactions.

Bishop Parker spoke directly to the Seek the City initiative. He explained that it was in process before the chapter 11 filing and was not connected with the Debtor's decision to file bankruptcy. Hrg. Rec. 1, at 11:06:50. Bishop Parker noted that Seek the City was the result of several studies concerning changing attendance and resources at parishes in the diocese, particularly within Baltimore City.¹⁴

Based on Bishop Parker's testimony, the decisions concerning the consolidation of 61 parishes within Baltimore City into approximately 30 parishes not only were made in accordance with Canon Law but also was articulated in concept before the chapter 11 filing. Hrg. Rec. 1, at 11:04:00–11:10:30.¹⁵ The remaining aspects of Seek the City focus primarily on managing and disposing of parish and school property.

Bishop Parker explained that each parish is responsible for transactions involving its property, with only transactions over a certain threshold requiring the approval of Archbishop Lori under Canon Law. Hrg. Rec. 1, at 10:43:46–10:53:41; 11:19:29–11:32:30. Bishop Parker stated that the Debtor's only interest in parish real estate transactions is a 5% administrative fee and then payments on any debt owing from the parish to the Debtor.¹⁶

Bishop Parker's testimony also evidenced that the Debtor's resources assist nondebtor parishes and Seek the City. For example, the Debtor's primary outside counsel also provides services to the parishes and schools, which legal fees are paid by the Debtor (and its estate).¹⁷ Hrg. Rec. 1, at 2:37:00–2:38:50. Bishop Parker also described the work of the Debtor's employees and other consultants hired by the Debtor to assist with Seek the City. Id. at 12:08:50–12:09:30; 12:15:15–12:18:30.

Finally, Bishop Parker testified concerning the interparish loan account (“IPLF”)—an account that receives and distributes funds among the Debtor and the nondebtor parishes. Id. at 12:34:06. The IPLF appears to collect revenue (including proceeds from real estate transactions), which is then allocated to subaccounts for the various entities. It further appears that transaction proceeds from Seek the City are held in IPLF accounts. See, e.g., Hrg. Rec. 1, at 12:09:05–12:10:28.

Mr. Matera's testimony generally aligned with that provided by Bishop Parker. Mr. Matera, who serves as the Debtor's Chief Financial Officer, explained the separate nature of the Debtor's property and that held by the nondebtor parishes. According to Mr. Matera, each parish or school owns its property, pays its pastor and employees, and keeps its books and records. Hrg. Rec. 2, at 12:27–12:28:12. Mr. Matera stated that his office has a group of employees available to assist the parishes and schools with their accounting matters.

Mr. Matera also testified regarding the process the Debtor and its affiliated entities follow for the disposition or alienation of any real property. Hrg. Rec. 2, at 11:00–11:50; Adv. Pro. 26-00041, ECF 43, Ex. 9. That process involves a coordinated review process between the parish or school and the Debtor. For the most part, this process requires that a parish or school submit proposed transactions exceeding $700,000.00 to the archbishop, the priest consultants, and the board of financial administration. Hrg. Rec. 2, at 10:30:20–11:31:50; Adv. Pro. 26-00041, ECF 43, Ex. 5, at 68–69. The Debtor, in turn, may offer the parish or school assistance with respect to consultants, brokers, and other aspects of the proposed transaction. Mr. Matera also noted that a parish or school can decline the Debtor's suggestions at various points in the process. See, e.g., Hrg. Rec. 2, at 12:05:58–12:06:55.

Mr. Matera testified that the process for selling or alienating real property has not changed following the bankruptcy.¹⁸ He also stated that the process was largely the same before and after Seek the City, with one exception. A section restricting what parishes affected by Seek the City could do with transaction proceeds was added at the inception of the initiative.¹⁹

Mr. Matera provided additional details concerning the implementation and status of Seek the City from the Debtor's perspective. He noted that none of the parishes have been consolidated or merged under civil law and that approximately 20 parishes included in the initiative still have property to sell. See, e.g., Hrg. Rec. 2, at 1:45:55–1:46:55.

At several points in his testimony, Mr. Matera referred to Seek the City as an “extraordinary” action. See, e.g., Hrg. Rec. 2, at 12:32:00; 12:43:45. His comments were in the context of the Debtor's actions concerning parish or school transactions. He also explained the financial impact of Seek the City on the Debtor, confirming that the fees and other payments due to the Debtor through that process and that offertory collections had not changed materially.²⁰

With this factual record (and the additional findings incorporated into the following section), the Court resolves the Motion on an interim basis.

III. Analysis and Conclusions of Law

The Court starts its analysis, where it must, with the language of the Code.²¹ Section 363 of the Code provides, in pertinent part,

(b)(1) The trustee, after notice and a hearing, may use, sell, or lease, other than in the ordinary course of business, property of the estate, ․

(c)(1) If the business of the debtor is authorized to be operated ․ and unless the court orders otherwise, the trustee may enter into transactions, including the sale or lease of property of the estate, in the ordinary course of business, without notice or a hearing, and may use property of the estate in the ordinary course of business without notice or a hearing.

11 U.S.C. § 363. In addition, a subsequent part of section 363 provides,

(d) The trustee may use, sell, or lease property under subsection (b) or (c) of this section—(1) in the case of a debtor that is a corporation or trust that is not a moneyed business, commercial corporation, or trust, only in accordance with nonbankruptcy law applicable to the transfer of property by a debtor that is such a corporation or trust; ․.

Id.

A few points about this language deserve emphasis. First, the statutory language is focused on the use, sale, or lease of the debtor's property and estate property. Second, notice and hearing (as defined in section 102 of the Code)²² are required only if the use, sale, or lease is not in the ordinary course of business, but the Court may “order[ ] otherwise” in connection with the use, sale, or lease in the ordinary course. Finally, the rules may be different in certain contexts for a debtor “that is not a moneyed business, commercial corporation, or trust.”

Here, the facts show that the core dispute concerns “use” of the Debtor's or the estate's property. Although the Debtor's resources and services are being used to assist transactions, none of the property being sold or leased is estate property.²³ This Court and others generally respect state law corporate formalities.²⁴ The record demonstrates that the Debtor is a distinct and separate entity from each parish and school corporation and the archbishop in his capacity as the ordinary of the archdiocese.

The record also demonstrates that the Debtor has long provided real estate services to the parish and school corporations.²⁵ Bishop Parker testified regarding the longstanding relationship between the Debtor (as “central services”) and the nondebtor parishes and schools; he explained the nature of the real estate services provided by the Debtor and that those had not changed since the filing of the bankruptcy.

Seek the City admittedly has affected certain of the parish and school corporations. Moreover, those parishes may be requesting authority of the archbishop as the ordinary to sell property. Bishop Parker testified that the decision to sell is left to the pastor and the parish. Hrg. Rec. 1, at 10:50:50.²⁶ An indirect consequence may be an increase in real estate transaction services provided by the Debtor, but that is not a change in the Debtor's business. Seek the City has not changed in any material way how the Debtor uses its property (or the role played by the Debtor) in real estate transactions.

The Court must consider these facts under the two-part test commonly used to evaluate whether any given transaction is in the ordinary course of business for purposes of section 363(c).²⁷ This test evaluates what is ordinary in the debtor's business/industry, as well as creditors’ reasonable expectations. The structure of the Debtor as a separate entity from, and a service provider to, the nondebtor parishes and schools appears to align with general diocesan structure and Maryland law.²⁸ The real estate transaction policy is available on the Debtor's website. Adv. Pro. 26-00041, ECF 43, Ex. 9.²⁹ Although an individual unfamiliar with the church may not understand how the Debtor operates, that information is publicly available and did not change as a result of this bankruptcy. Hrg. Rec. 1, at 10:52:00; 11:10:30–11:12:00; 3:40:20; 3:42:10; and Hrg. Rec. 2, at 11:54. The filing of a bankruptcy case itself does not transform ordinary business practices into something extraordinary.³⁰

The consistency of practice in real estate transactions during both the pre- and postpetition periods and the non-material nature of any changes vis-à-vis the Debtor and its property in connection with those transactions support the Debtor's position that its use of property to assist parish and school corporations in real estate transactions is in fact ordinary course.³¹

In concluding that the Debtor's real estate services are being provided in the ordinary course of business, the Court makes two observations concerning subsections 363(c) and (d) of the Code.

Starting with the latter, section 363(d)(1) acknowledges that a debtor's obligations under nonbankruptcy law may factor into the relief provided under subsections 363(b) and (c) of the Code.³² (Similarly, even if the Court was analyzing the use of the Debtor's property under section 363(b) of the Code, a Debtor may consider factors other than the highest dollar amount in exercising its business judgment under section 363.)³³ Nevertheless, the parties did not address the potential application of section 363(d)(1) to this matter and, as such, the Court does not address or rely on it herein.

Moreover, the Court's resolution of the Emergency Motion is on an interim basis and subject to the conditions imposed by this Order, which the Court determines are necessary and appropriate under the circumstances of this case and the language of section 363(c)(1). That subsection allows the Court to, among other things, impose parameters on a debtor's ordinary course of business transactions.

The Court has heard the parties’ desire for information and the need to build trust and strengthen communication among all parties. Indeed, the Committee, the Survivors, and the Insurers all have raised issues with trust and information sharing at various points in this case. As the Court has noted on several occasions, transparency and disclosure serve important roles in this chapter 11 case. The Court thus will require certain disclosures and procedures for the Debtor's involvement in real estate or other transactions with the nondebtor parish or school corporations. Again, the focus is on the Debtor as a corporation sole and not on the activities of the parish or school corporations or the archbishop as the ordinary of the archdiocese.

Accordingly, for the reasons set forth above, it is, by the United States Bankruptcy Court for the District of Maryland,

ORDERED, that the Emergency Motion is granted on an interim basis on the terms and conditions set forth herein; and it is further

ORDERED, that the Debtor may continue to use its property and resources in the ordinary course of business, under section 363(c)(1) of the Code, to assist nondebtor parish and school corporations with real estate transactions (including sale and lease transactions),³⁴ including in connection with Seek the City, provided, however, that

• The Debtor shall file a Notice of Transaction for each such transaction at least 14 days prior to any contemplated closing or effective date; and

• In each Notice of Transaction filed with the Court, the Debtor shall include:

o The nature/purpose of the sale, lease, or other transaction;

o A general description of the Debtor's resources used and/or services provided in connection with the transaction, and the approximate value of such resources and services;

o The total purchase or contract price;

o The total amount of fees and expenses being paid at closing (or on the effective date) from the purchase or contract price to parties other than the Debtor;

o The total amount of the 5% administrative or other fee being paid to the Debtor (the “Fee”);

o The total amount of any and all outstanding debt obligations owing from the nondebtor parish or school to the Debtor (the “Outstanding Debt”);

o The total amount of net proceeds going to the nondebtor parish or school, not including the Fee or the Outstanding Debt; and

• After each transaction closes or is effective, the Debtor shall file a Line with the Court certifying that the total amount of the Fee and the total amount of the Outstanding Debt has been paid to the Debtor or is being held in escrow for the benefit of the Debtor and the Debtor's estate pending further Order of this Court;35 and

• The Debtor shall use its best efforts to respond to any request from the Committee for additional information relating to a Notice of Transaction within three business days of such request; and it is further

ORDERED, that the Court will hold a virtual status conference on the Emergency Motion and the implementation of the procedures set forth in this Order on July 6, 2026, at 10:00 a.m., ET, at which status conference the Court will consider, among other things, the information provided by the Debtor under this Order and whether to finalize the terms of this Order.

FOOTNOTES

1.   The debtor in this case is operating as a debtor in possession under section 1107 of the Bankruptcy Code. 11 U.S.C. § 1107. The debtor is continuing to administer its assets and operate its business in this chapter 11 case. As such, the Court refers to “debtor's property” and “estate property” herein interchangeably—primarily to signal property subject to this chapter 11 case.

2.   11 U.S.C. §§ 101 et seq. (the “Code”).

3.   As discussed below, the record shows that Archbishop Lori serves three distinct and separate roles: the chief executive officer of the corporation sole, the ordinary of the archdiocese, and the president of each parish corporation. Hrg. Rec. Apr. 16, 2026, at 10:29:05–10:40:48.

4.   As noted above, the Debtor is operating as a debtor in possession under section 1107 of the Code. 11 U.S.C. § 1107. All references to the Debtor herein include its role as a debtor in possession in the underlying chapter 11 case.

5.   The Court has thoroughly reviewed the record of the Hearing, the exhibits admitted into evidence, and all the parties’ papers. The Court refers to the record herein by day of the Hearing (i.e., Hrg. Rec. 1 (April 16, 2026); Hrg. Rec. 2 (April 20, 2026); and Hrg. Rec. 3 (April 21, 2026)).

6.   The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. The District Court has referred this case and this matter to this Court under 28 U.S.C. § 157(a) and Local Rule 402 of the United States District Court for the District of Maryland. Further, the Court sets forth certain references and citations in the footnotes of this Order solely to allow for the provision of more (rather than less) information; the use of footnotes is not intended to minimize the importance of the materials or their relevance to the Court's holding.

8.   The Court will address the Committee's allegations concerning Seek the City in a separate Order to be entered in the Adversary Proceeding.

9.   These arguments are largely set forth in the Debtor's Motion to Dismiss [ECF 15] but were referenced at various points during the Hearing.

10.   Given the overlap in issues and evidence between the Emergency Motion and the Committee's Motion in the Adversary Proceeding, the parties created a joint evidentiary record, and the Court herein considers all the evidence presented by both parties in the context of the Pending Matters. In addition, the Court notes for completeness that the Committee also identified Archbishop Lori as a witness, which the Court addressed by separate Order. Adv. Pro. 26-00041, ECF 68.

11.   The Court acknowledges Bishop Parker's testimony on cross-examination that he cannot know what Archbishop Lori is thinking at all times. Hrg. Rec. 1, at 11:35:00. See also id. at 2:48:50–2:49:46. Bishop Parker was, however, precise and thorough in his testimony concerning the Debtor's operations (which he oversees as Vicar) and concepts relating to Seek the City. The Court finds that his various roles with the Debtor and the nondebtor parishes and schools, as well as within the archdiocese generally, and the length of his service to the archdiocese make him knowledgeable and credible on the matters within his testimony. For Bishop Parker's background and history with the Debtor, see Hrg. Rec. 1, at 10:39:05–10:41:46; Adv. Pro. ECF 43, Ex. 6, at 22–23.

12.   See also, e.g., ECF 2216, Ex. 4–7.

13.   See also MD Code, Corporations and Associations, § 5-315.

14.   The Debtor offered as exhibits public documents that shared the concepts and concerns underlying what ultimately became Seek the City, beginning in 2015. ECF 2216, Exs. 1–3. See also Hrg. Rec. 1, at 10:55:00–11:04:00.

15.   See also Hrg. Rec. 1, at 11:48:55–11:53:12; ECF 2216, Exs. 1–3.

16.   Those debts include: “Insurance Cathedraticum taxes[;] Previous unpaid Special Assessment of Parishes for the Support of Catholic Schools[;] Unfunded pension obligations[;] Outstanding loans from the parish or school from the Inter-Parish Loan Fund (IPLF) or other loans from the Archdiocese[;] Any other unpaid obligations of the parish or school.” Adv. Pro. 26-00041, ECF 43, Ex. 9, at pp. 7–8. The Committee's Exhibit 9 generally described this process and is consistent with Bishop Parker's testimony. Id. at 1–10.

17.   The record contains some testimony that the 5% administrative fee is intended to cover legal fees and other costs paid by the Debtor. It also, however, includes testimony that the 5% administrative fee is not adequate to cover all legal fees and other costs. Hrg. Rec. 2, at 12:02:20–12:04:55. The Court finds most relevant that this practice has not changed since the chapter 11 filing—the provision of services and the reimbursement through the administrative fee has largely remained the same over time. That said, the Court will request additional information on these legal fees and other costs through this interim Order.

18.   Mr. Matera discussed the real estate policy that governs the sale of parish property at some length. Hrg. Rec. 2, at starting at 10:55:00. See also Adv. Pro. 26-00041, ECF 43, Ex. 9. Mr. Matera stated that the policy, the general process, and the treatment of transaction proceeds was the same both prior to and after the bankruptcy filing. See, e.g., Hrg. Rec. 2, at 11:54:02–11:54:40.

19.   The last section of the policy addressing Seek the City indicates that it “is effective fiscal year 2023 for a period of five years. The Archbishop must specifically renew this policy if it is to continue beyond fiscal year 2028.” ECF 43, Ex. 9, p. 11. The primary change appears to be in the treatment of transaction proceeds from any transaction involving property by a parish affected by Seek the City. Id. at pp. 10–11. Hrg. Rec. 2, at 12:09:05–12:10:28; Hrg. Rec. 1, at 12:35:00–12:35:10.

20.   See, e.g., Hrg. Rec. 2, at 10:47:22–10:53:00; 1:47:42–1:48:15; Hrg. Rec. 1, at 12:17:00–12:17:39.

21.   See, e.g., U.S. v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989) (“The task of resolving the dispute over [interpretation of a statute] begins where all such inquiries must begin: with the language of the statute itself.”).

22.   11 U.S.C. § 102 provides in relevant part that “after notice and a hearing ․ means after such notice as is appropriate in the particular circumstances, and such opportunity for a hearing as is appropriate in the particular circumstances; but ․ authorizes an act without an actual hearing if such notice is given properly and if ․such a hearing is not requested timely by a party in interest; or ․ there is insufficient time for a hearing to be commenced before such act must be done, and the court authorizes such act[.]”

23.   See, e.g., Hrg. Rec. 1, at 10:41:10; 10:41:46.

24.   In general, “[a]ssets owned by a corporation in which a debtor is a stockholder are not property of the debtor, but that of the corporation.” Simpson v. Levitsky, et al. (In re Levitsky), 401 B.R. 695, 710 (Bankr. D. Md. 2008) (citing Kreisler v. Goldberg, 478 F.3d 209, 214 (4th Cir. 2007)). See also Fowler v. Shadel, 400 F.3d 1016, 1019 (7th Cir. 2005) (“The corporate assets of Fowler Trucking, Inc. are not property of the debtor [sole shareholder] and therefore cannot become property of [the debtor's] bankruptcy estate.”); In re Brittain, 435 B.R. 318, 322 (Bankr. D.S.C. 2010) (finding that, under applicable state law, “a member's bankruptcy estate has no interest in property of an LLC and that the estate's property interest is limited to the member's distributional interest”).

25.   See, e.g., Hrg. Rec. 1, at 10:44:42; 10:46:29.

26.   See also, e.g., Hrg. Rec. 1, at 11:19:29; 11:10:30.

27.   As one court in this Circuit has explained,Debtors in possession operating in Chapter 11 are statutorily authorized to “enter into transactions ․ in the ordinary course of business, without notice or a hearing.” 11 U.S.C. § 363(c)(1). In determining what constitutes a transaction in the ordinary course of business, “courts have engaged in a two-step inquiry ․: a ‘horizontal dimension’ test and a ‘vertical dimension’ test.” In re Roth Am., Inc., 975 F.2d 949, 952 (3d Cir.1992) (citing Benjamin Weintraub & Alan Resnick, The Meaning of “Ordinary Course of Business” Under the Bankruptcy Code—Vertical and Horizontal Analysis, 19 UCC L.J. 364 (1987)); see also; In re Ohio Valley Amusement Co., Case No. 03–50356, 2008 WL 5062464 at *3–4, 2008 Bankr.LEXIS 3191 at *11–12 (Bankr.N.D.W.Va. Dec. 1, 2008) (applying the vertical and horizontal dimension tests).The “horizontal dimension” test considers “whether from an industry-wide perspective, the transaction is of the sort commonly undertaken by companies in that industry.” Roth Am., 975 F.2d at 953. The “vertical dimension” test considers the creditors’ expectations and whether the economic risk of the transaction is different from those accepted by creditors that extended credit to the debtor pre-petition. Ohio Valley Amusement Co., 2008 WL 5062464 at *4, 2008 Bankr.LEXIS 3191 at *12. Consonant with the horizontal and vertical dimension tests, the Court of Appeals for the Fourth Circuit in Bowers v. Atlanta Motor Speedway (In re Southeast Hotel Props. Ltd. P'ship), 99 F.3d 151, 158 (4th Cir.1996), analyzed a post-petition transaction to see whether the type of transaction was a “common practice” in the debtor's industry, and whether a creditor could “reasonably expect” a debtor to enter into that type of post-petition transaction. See also Devan v. Phoenix Am. Life Ins. Co. (In re Merry–Go–Round Enters.), 400 F.3d 219, 226 (4th Cir.2005) (same).In re Fairmont Gen. Hosp., Inc., 510 B.R. 783, 787 (Bankr. N.D.W. Va. 2014).

28.   See, e.g., Hrg. Rec. 1, at 10:39:05; 10:41:46–10:52:00. See also See 1832 Md. Laws 308; 1868 Md. Laws 268; 1874 Md. Laws 398; 1894 Md. Laws 50; 1927 Md. Laws 397; Md. Code Ann., Corps. & Ass'ns §§ 5-301 et seq. In addition, the Court notes that Bishop Parker's testimony explained the “corporate structure” of the Debtor and the nondebtor parishes and schools, as well as the three roles served by Archbishop Lori, under Canon Law. Hrg. Rec. 1, at 10:39:05–10:53:00. The Court does not decide this matter on the basis of Canon Law but notes that its existence and the Debtor's processes following Canon Law support the Debtor's positions that its conduct is ordinary course within the industry. See also ECF 2196, at p. 6.

29.   Hrg. Rec. 2, at 10:53:50–10:56:10; 10:57.

30.   Indeed, some courts have observed that even a postpetition change in business (as compared to prepetition practices) does not automatically render the transaction out of the ordinary course. See, e.g., In re Stiletto Mfg., Inc., 588 B.R. 762, 769 (Bankr. E.D.N.C. 2018) (“Finally, while the debtor's ‘prepetition activities guide the court in ascertaining whether a transaction is in the ordinary course,’ such prepetition activities are not dispositive of the inquiry, as ‘changes between prepetition and postpetition business activity alone are not per se evidence of extraordinariness.’ Id.”) (citation omitted).In addition, the Court acknowledges that Mr. Matera referred to the consolidation and merger of parishes as “extraordinary.” See, e.g., Hrg. Rec. 2, at 12:32:00; 12:43:45. The context of that testimony suggests that Mr. Matera was referring to the Seek the City initiative and the related parish real estate transactions (and mergers) rather than the Debtor's role in the real estate transactions. Again, the Court views the Debtor and its services as distinct from the global Seek the City initiative and the parish and school property affected thereby.

31.   The Court acknowledges that the record contains testimony suggesting use of the Debtor's resources in connection with Seek the City more generally. The Court is not addressing the overarching Seek the City initiative herein; rather, those matters are best addressed in the Adversary Proceeding. The Court's focus in this Order is solely the Emergency Motion and the real estate transactions described in that motion.

32.   That subsection was added to the Code in 2005, together with several other amendments that changed aspects of the Code for nonprofit and similar organizations that are debtors in chapter 11 cases (collectively referred to as “nonprofit debtor organizations”). For example, in addition to section 363(d)(1), Congress also amended sections 541 and 1129 to require compliance with applicable nonbankruptcy law in the context of transfers involving nonprofit debtor organizations. Likewise, creditors may not file an involuntary petition against a nonprofit debtor organization or seek to convert its case to one under chapter 7 of the Code. 11 U.S.C. §§ 303(a), 1112(c). As noted, the parties did not brief the application, if any, of section 363(d)(1), and the Court does not rely on it for purposes of this Order. The Court notes the subsection only for purposes of highlighting the slightly different analysis applicable to nonprofit debtor organizations in certain contexts under the Code.

33.   See, e.g., In re Bakalis, 220 B.R. 525, 533 (Bankr. E.D.N.Y. 1998) (“On the other hand, overemphasis of this usual outcome overlooks a fundamental truism, i.e., a ‘highest’ bid is not always the ‘highest and best’ bid. The inclusion of ‘best’ in that conjunction is not mere surplusage. As indicated above, the two bids in this case differ by more than just price.”); see also In re Fam. Christian, LLC, 533 B.R. 600, 621 (Bankr. W.D. Mich. 2015) (same). See also generally In re MF Global Inc., 467 B.R. 726, 730 (Bankr. S.D.N.Y. 2012) (“Although not specified by section 363, the Second Circuit requires that transactions under section 363 be based on the sound business judgment of the debtor or trustee. See, e.g., In re Chateaugay Corp., 973 F.2d 141 (2d Cir. 1992); Comm. of Equity Sec. Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1071 (2d Cir. 1983). Generally, ‘[w]here the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will generally not entertain objections to the debtor's conduct.’ In re Johns-Manville Corp., 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986). If a valid business justification exists, then a strong presumption follows that the agreement at issue was negotiated in good faith and is in the best interests of the estate; the burden of rebutting that presumption falls to parties opposing the transaction. See In re Integrated Res., Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992).”); In re Alpha Natural Resources, Inc., 546 B.R. 348, 356 (Bankr. E.D. Va. 2016) (explaining deferential nature the business judgment test).

34.   The Court focuses here on the Debtor, its property, and property of the Debtor's estate. Although not needed, for purposes of clarity, the Court notes that nondebtor parties (including parishes and schools) may continue to conduct their affairs in connection with the transactions addressed by this Order in the ordinary course of business. Accordingly, the relief requested by the Emergency Motion at ECF 83 (and opposed by the Opposition at ECF 84) in the Adversary Proceeding is moot.

35.   The Court recognizes that the content of, and economic terms included in, the Notice of Transaction may differ depending on the kind of transaction at issue. The Debtor shall use good faith efforts to comply with the terms and spirit of this Order in drafting and filing any Notice of Transaction.

MICHELLE M. HARNER U.S. BANKRUPTCY JUDGE