Lawsuits May Send Catholic Diocese into Bankruptcy

By John Gilliland [Tucson AZ]
June 21, 2004

Unable to pay the victims of priestly sexual abuse, the Roman Catholic Bishop of Tucson, Ariz., says he must take the unprecedented step of declaring the diocese bankrupt.

Bishop Gerald Kicanas said that if attorneys for the alleged victims press for a large settlement, he has no other choice.

"Chapter 11 bankruptcy is the only way for the government to help us to continue our mission," Kicanas said by telephone from the United States Conference of Catholic Bishops in Denver. "We made a multi-million-dollar settlement in some earlier cases because we thought that would be the end, but it was unfortunately only the beginning."

In a letter read to congregations throughout the diocese, which stretches through some of the poorest parts of America in southern Arizona, Kicanas told parishioners, "Bankruptcy now appears to be the only option for the diocese."

The lawyer handling several pedophilia cases for the diocese, Barry Mac Ban, agreed there is no alternative. "The diocese doesn't have the resources of the Boston Diocese, so the reality is that it's not possible to deal with all the claimants," he said. "As it now stands, there's no way the diocese can meet the demands made by theses claimants and still operate the church "

The Boston Diocese recently sold some high-value real estate to cover settlements paid to the victims of predatory priests, an option Bishop Kicanas says is not available to him. "We are a 'mission' diocese, so we depend on grants and donations in a very poor area. It has always been rather financially fragile," he said.

Attorney for the plaintiffs, Lynne Cadigan, doesn't believe the diocese is as poor as it claims to be. "The diocese's claims are false,' she said. "They've never showed their financial records. If they are so broke, why don't they turn over their records to us, confidentially?"

Both Bishop Kicanas and Mac Ban note that the diocese's books are open and available on their website for anyone to read. Mac Ban says the posted records are accurate, and he says the diocese has done more than is required by law in making its financial transactions public. "No one is obligated, just because one is sued, to turn over (financial) records. The diocese's records are online now and have always been."

But Cadigan doubts that the records posted online are accurate. Nor does she have faith that the diocese will actually declare bankruptcy. "This is a ploy to reduce the settlement. We're asking for $5 million, max, for 16 clients. The diocese would spend $2 million on bankruptcy lawyers. No one wants bankruptcy. It would be a nightmare for the victims, the priests and the parishioners. Show us the books, and if it's true, we'd consider taking less money."

But Bishop Kicanas says that is news to him. "That's the first I've heard of that. It was not mentioned in our last mediation session."

Mac Ban strongly denies any legal maneuvering in the Bishop's decision to seek bankruptcy, "The diocese does not believe in ploys. The Bishop has inherited a heck of a mess. His job now is to figure out what is in the best interests of the diocese."

Mac Ban said practically speaking, this would not be much different than a Chapter 11 bankruptcy filing. He noted that corporate bankruptcies allow those companies to continue operating while they got their finances in order and the claims against them settled.

But Cadigan says the diocese has the money to pay her clients. "The diocese has insurance of up to $2 million per priest. One of the diocese representatives told me these victims should take smaller settlements because these are poor Hispanics; they don't deserve such a large settlement. This is more money than they have ever seen in their lives."

An even larger issue may overshadow whether or not the Tucson Diocese becomes the first in America bankrupted by sexual abuse lawsuits. Mac Ban said there are constitutional questions as well.

"It's the position of the parishioners that they are the owners of their parishes, so there would be a constitutional issue, that of state control of church property, that could go to the U.S. Supreme Court," he said.

Mac Ban adds, "You're not just dealing with the local diocese. There are similarly situated dioceses across the country. This issue has never been raised in more than 2000 years. These are unprecedented circumstances."

Bishop Kicanas says the demands of the victims and the needs of the church present him with a tough choice. "Clearly, my hope is to mediate the cases we face. On the other hand, we have limited resources.

"My desire, my concern is that I feel deeply about the need to respond to the pain of victims and to ensure the mission of the Church continues."


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