The Bankruptcy and the Settlement

By David Reinhard
The Oregonian [Portland OR]
December 24, 2006

A lmost five years ago, on a Wednesday right before Easter 2002, I sat in a pew at St. Michael the Archangel Church in downtown Portland and listened to a priest pour out his broken heart. The Rev. Paul Peri stood in the center aisle that noon and talked about what everyone and no one was talking about: the priest sexual abuse scandal engulfing the Roman Catholic Church in the United States.

This devoted priest shared with his congregants everything they, too, felt: sorrow for the victims, anger toward the men who abused children and brought shame on the clergy, and a sadness for their church. I thought then that Peri's homily and others like it across the land that season were a turning point in the scandal. Catholic clergy and laity had at long last started to speak to each other about the once unspeakable, and there was comfort —even hope— in the shared suffering.

But more suffering was to come, particularly in Oregon. More accusations. More victims. More lawsuits. And humiliation. In July 2004, Portland became the first archdiocese in the United States to file for bankruptcy.

St. Michael's bears the literal and figurative marks of the archdiocese's time in bankruptcy. It's a beautiful brick building, with the Italianate flourishes of the immigrant community that built it. But it's old and in need of restoration and a major seismic upgrade. It's one good earthquake away from being a pile of rubble and a danger to all within. Restoration plans were afoot in 2002. They crashed to a halt amid the uncertainties of the bankruptcy. The upshot can be seen along the north and south interior walls, where in spots the plaster has been scraped down to reveal the exterior bricks.

Yes, the restoration would benefit worshippers, but the project also includes updating the basement kitchen, which provides daily meals for downtown poor and homeless people.

Although you may see no tangible evidence of the bankruptcy's impact at every parish in the archdiocese, there's been an impact nonetheless — for parishioners and nonparishioners alike: Projects not undertaken. Funds not raised. Plans put on hold.

Happily, all that is about to change, thanks to a settlement that wouldn't have been possible but for the bankruptcy. And thanks to two judges (U.S. District Judge Michael Hogan and Lane County Circuit Judge Lyle Velure) who mediated.

The result is a Christmas gift to parishioners, nonparishioners and the victims.

The archdiocese will pay $40.7 million to settle 143 priest sex abuse cases. It also puts aside $13.75 million for 26 unsettled cases, and another $20 million for any future claims. That's $75 million tops, and the latter two numbers may come in lower. Compare that figure to the combined total damages the archdiocese faced for the two — two! — claims going to trial the day it filed for bankruptcy: $155 million.

The archdiocese has contained its liabilities and brought an end to this ordeal.
What's as important is who pays and who doesn't. Parishioners won't see their properties and schools sold off or held as collateral for loans to pay claims. Nor is an increased assessment on parishes planned.

Who foots the bill? Mainly, the archdiocese's insurers, who had either refused, or were about to refuse, to pay any more claims prior to the bankruptcy filing. The fact is that the filing brought insurers back into the picture because it allowed them to "buy back" policies and thus eliminate their future exposure.

And the victims? Those who settle under the plan won't have to wait years for payments held up on appeal. They can get on with their lives. (Yes, it's also Christmas for their lawyers, who'll see big paydays, but that's our legal contingency-fee system.)

Finally, the settlement that grew out the bankruptcy will allow the 124 parishes and 24 missions in Western Oregon to proceed with plans to advance their core work: saving souls and serving the poor, Catholic and non-Catholic alike.

There is, in downtown Portland, a beautiful, tired church with scars in its old walls that stands ready.

A Merry Christmas, indeed.

David Reinhard, associate editor, can be reached at 503-221-8152 or


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