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BANKRUPTCY-SPOKANE Dec-7-2004 (620 words) xxxn
Spokane becomes third U.S. diocese to file for bankruptcy
By Catholic News Service
SPOKANE, Wash. (CNS) -- The Diocese of Spokane became the third U.S. diocese to file for Chapter 11 bankruptcy because of civil lawsuits claiming sex abuse of minors by clergy.
"Demands by the plaintiffs continue to be beyond the ability of the diocese to meet," said Spokane Bishop William S. Skylstad in announcing the decision Dec. 6.
The Spokane Diocese listed $81.3 million in liabilities and $11.1 million in assets in papers filed the same day with the U.S. Bankruptcy Court of the Eastern District of Washington.
News reports said that $77 million of the liabilities result from sex abuse suits. Filing for Chapter 11 bankruptcy means the lawsuits are halted and the federal bankruptcy court will determine how much to pay valid claimants.
In November Bishop Skylstad was elected president of the U.S. Conference of Catholic Bishops. The other two dioceses to file for bankruptcy are the Archdiocese of Portland, Ore., and the Diocese of Tucson, Ariz.
Bishop Skylstad, in a Dec. 6 open letter to victims, said that filing for bankruptcy is the best way for the diocese to meet its responsibilities to victims "in an equitable and just manner" while continuing to provide church programs, including "efforts to prevent future abuse."
One advocacy group for sex abuse victims, Survivors Network of those Abused by Priests, lobbied against Bishop Skylstad's election as USCCB president, saying his election could be seen as approval for bankruptcy as the approach to resolving suits.
Less than two weeks before his election as president Nov. 15, the bishop had announced that after a collapse of mediation efforts with abuse victims in the Spokane Diocese his diocese would have to enter Chapter 11.
An information sheet in question-and-answer format published on the Spokane diocesan Web site Dec. 6 said the bankruptcy decision is not expected to interfere with the normal operations of parishes and schools nor would it cut into the pension plan of church workers.
The retirement plan "is not subject to the claims of creditors," said the information sheet.
The filing came three days after the diocese reached settlements for $664,500 with five victims of sex abuse perpetrated by priests. During 2002-03, $625,000 in settlements was agreed to, said the diocese.
A further 20 lawsuits were pending at the time of the filing, but these did not involve all the people the diocese regards as possible claimants, said the information sheet.
"We have identified some 125 potential claimants," said the bishop. "About half of those 125 have retained legal counsel."
Bishop Skylstad said that filing for bankruptcy would be beneficial to those victims who have not yet filed claims as it would allow them to be treated equally if they came forward rather than having to wait for cases already in court.
"Chapter 11 protects victims from losing a race to the courthouse" by letting them file claims and be treated equally in the same court with people who previously filed lawsuits, he said. "All valid claims will be treated equally."
Under Chapter 11 filing the current lawsuits would be shifted from a state court to U.S. Bankruptcy Court.
The diocesan information sheet said that to help protect the rights of parishes during the bankruptcy proceedings an association of parishes has been formed. It is independent of the diocese and has its own legal counsel.
"The association was formed to provide a structure and forum for the consideration of issues related to the Chapter 11 filing," the information said.
According to the 2004 Official Catholic Directory, the diocese has 83 parishes and a Catholic population of 87,000.
Lawyers for victims quoted in Spokane newspapers said the bankruptcy was unnecessary and served only the financial interests of the diocese.
END
Copyright (c) 2004 Catholic News Service/USCCB. All rights reserved.
This material may not be published, broadcast, rewritten or otherwise distributed.
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