Spokane Diocese to File for Bankruptcy

By John Wiley
Associated Press
November 10, 2004

SPOKANE, Wash. (AP) — The Roman Catholic Diocese of Spokane, unable to settle sexual abuse lawsuits, will file for bankruptcy by the end of the month, Bishop William Skylstad said Wednesday.

The Chapter 11 bankruptcy protection will allow the diocese to continue functioning while protecting people who were sexually abused by priests in the past, Skylstad said.

"In the end, Chapter 11 gives everyone a sense of finality and closure with fairness, justice and equity," Skylstad said in a news conference. "Valid claims will be settled. The diocese will continue its ministry."

Skylstad, who is scheduled to assume the presidency of the U.S. Conference of Catholic Bishops on Monday, said filing for bankruptcy will suspend litigation and its costs on dozens of sexual abuse claims against the diocese.

The first of those cases, seeking tens of millions of dollars in damages, is scheduled to start Nov. 29. Skylstad said the bankruptcy filing will occur on or before that date.

The filing would place on hold 19 lawsuits 58 plaintiffs have filed accusing nine diocesan priests and two Jesuits. Three of the 11 alleged abusers are dead.

Advocates for abuse victims immediately denounced the diocese's announcement.

"Without a shred of proof, Bishop Skylstad is asking us to believe he's struggling financially and must stop the truth from being told and the victims from healing by seeking bankruptcy protection," said Michael Ross, a local leader of Survivors Network of those Abused by Priests.

Ross said that Skylstad and other bishops are worried that trials will expose the lengths church leaders took to cover up years of abuse by priests. "His real agenda is to make sure the secrets stay secret," Ross said.

Skylstad has said one of the goals of a Chapter 11 filing would be to protect the assets of the nearly 20 schools and 81 parishes in the diocese, which covers the eastern third of the state.

A bankruptcy judge would determine how much money is owed claimants, then the diocese would decide whether assets would have to be sold, Skylstad said.

Skylstad said sorting out the claims in bankruptcy court will protect "those harmed by losing the race to the courthouse."

He said about half of the 125 people who could potentially file sex abuse lawsuits have hired lawyers.

Shaun Cross, a bankruptcy lawyer whose firm was retained by the diocese, said the plaintiffs in effect become unsecured creditors in a bankruptcy, subject to payments determined by a judge.

The Archdiocese of Portland, Ore., and the Diocese of Tucson have already filed for bankruptcy protection. The Portland diocese filed in July, the same week a lawsuit was scheduled for trial. The Tucson diocese filed in September, saying it needed court protection because of legal costs from the cases.

The Archdiocese of Seattle issued a statement Wednesday saying it has settled all of its claims of clergy child sexual abuse "for fair and reasonable amounts" and does not currently plan to file for bankruptcy protection.

"We do not anticipate the need to consider bankruptcy protection if we continue to have the cooperation of our insurance carriers, and settlement amounts in the remaining cases are fair and reasonable," the archdiocese said.

Last week, the Spokane diocese announced that talks to settle 28 sexual abuse claims had failed. The talks involved five lawsuits involving former priest Patrick O'Donnell, who has admitted he sexually abused boys from the time he was in seminary.

Skylstad has said settlement talks failed because insurance companies were not willing to pay the demands of the victims.

Lawyers for the victims also sought additional millions from the diocese, which Skylstad said it could not pay. He said there were also concerns about the possibility of new claims in the future.

In a recent letter to parishioners, Skylstad said the total amount of claims "is in the tens of millions of dollars and far exceeds the net worth of the diocese."

O'Donnell, 62, served as a priest for the Spokane diocese until he was removed from ministry in 1986. The first of the five lawsuits alleging that the diocese didn't do enough to protect children from O'Donnell is scheduled for trial Nov. 29.

O'Donnell's did not immediately return a call seeking comment on Wednesday.

As of Sept. 30, the diocese estimated it had spent more than $1.8 million in legal bills, public relations, settlements, counseling and other costs related to the claims.


Any original material on these pages is copyright © 2004. Reproduce freely with attribution.