Fairbanks Diocese Plans to File for Bankruptcy

By Lisa Demer
Anchorage Daily News
February 13, 2008

The Catholic Diocese of Fairbanks intends to file for bankruptcy reorganization within the next few weeks because negotiations to settle dozens of sexual abuse claims failed, the bishop announced Wednesday.

More than 140 people have filed claims against the diocese alleging sexual misconduct by priests or church volunteers that stretch back decades, from the 1950s to the early 1980s, according to the diocese. Most of those claims are still pending though a handful have been settled.

"We acknowledge that harm was done to people and this is, we think, the most pastoral way to address those hurts," said Robert Hannon, chancellor and special assistant to Bishop Donald Kettler.

The diocese intends to file for reorganization under Chapter 11.

The bankruptcy filing will open the financial records of the diocese to scrutiny and provide a way for what money the church has to be distributed fairly among abuse victims, Hannon said.

Victims earlier settled claims involving the same priests and volunteers that were filed against the Society of Jesus, Oregon Province, including 113 who are part of a $50 million settlement reached in November with the Jesuits.


Ken Roosa, an Anchorage lawyer who represents victims of priest abuse, said he anticipated the bankruptcy filing as the church's only viable way to deal with so many lawsuits.

"The reason they need this process is because their insurance companies are stiffing them," he said. "I'm only surprised it took so long."

Insurance carriers either refused to pay enough or anything at all, Roosa said.

"We applaud the bishop's decision to move forward," he said.

Settlement talks in December went nowhere because one of the insurance carriers for the diocese failed to "participate meaningfully," Hannon said. He identified that carrier as CNA. The Illinois-headquartered company couldn't be reached after hours Wednesday.

In addition, legal expenses were eating up what resources the diocese had - before the money got to victims, Hannon said.

Also, Roosa said a Fairbanks judge issued a key ruling a couple of weeks ago against the diocese in claims involving Joseph Lundowski, a lay missionary now deceased who was accused of abusing dozens of boys and young men from 1960 to 1975.


Parishes shouldn't be affected by the bankruptcy filing, Hannon said.

"You really can't close or consolidate parishes when you only have one every 200 or 300 miles," he said.

The Fairbanks diocese, with an annual budget of $6 million, is the nation's largest geographically, covering more than 400,000 square miles. But just eight of the 46 parishes support themselves, according to the diocese.

The diocese itself might have to sell assets or cut back on expenses, though the church does not plan to lay off any staff members, he said.

Bishop Kettler is sending a letter about the decision to all the parishes and asking for it to be read in services this weekend.

Find Lisa Demer online at or call 257-4390.


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