Portland Diocese, Abuse Victims Meet on Bankruptcy

By Teresa Carson
July 13, 2004

PORTLAND, Ore. (Reuters) - Sex abuse victims and the Roman Catholic Archdiocese of Portland squared off in a closed-door federal court session on Tuesday in their first meeting since the church filed an unprecedented U.S. bankruptcy petition last week.

Archdiocese officials pledged to compensate all claimants, according to participants at the meeting, but the church insists it cannot afford the big payouts likely if the abuse cases went to trial.

While the proceedings were mostly cordial, some victims filed court papers criticizing the church for refusing to make any sacrifices during bankruptcy protection.

The Portland Archdiocese became the first in the United States to file for protection from costly clergy abuse lawsuits that began more than two years ago in Boston and spread to many U.S. cities.

Portland's move caused a $300,000 check, written to a man who accused a priest of sex abuse, to bounce, and other victims were likely to see their checks returned, lawyers said.

"I settled a case two months ago," said Daniel Gatti, an attorney for a man who accused a priest of abusing him. "The person cashed the check Tuesday and it came back. Now I have to tell my client. He will be just devastated."

The biggest dispute involves how much money is available to current and future plaintiffs. The Archdiocese of Portland listed its assets between $10 million and $50 million in court documents.

"We say they have $500 million in assets," Gatti said.

"We are not seeking to take dedicated funds for charitable or church missions," Gatti said, "But they have assets that are unrestricted that are disposable for the plaintiffs."

Portland Archbishop John Vlazny's declaration last week the "pot of gold is pretty much empty right now" halted two trials in which suspected victims of abuse were seeking $155 million from the church.

That figure dwarfs the archdiocese's 2003-2004 revenues of $15.7 million disclosed in court filings and the $21 million it paid out last year alone to settle abuse cases. Insurance companies have refused to pay for future settlements, the church says.

One creditor group asked the court to make the church hire a bank based outside Oregon to avoid conflicts of interest for bank employees, who might be Catholics or feel pressure from other local Catholics to go easy on the church.

Those creditors also want to freeze employee travel, pay and hiring and suggested cutting church executives' pay by 25 percent and making significant staff cuts.

The court will consider the competing motions on Wednesday,

Portland is likely to be followed by the Archdiocese of Tucson, Arizona, where Bishop Gerald Kicanas has been openly discussing a Chapter 11 bankruptcy filing option for several weeks in the face of 16 lawsuits slated for September.


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