Judge Approves $500,000 in Duluth Diocese Legal Bills

By Tom Olsen
Duluth News Tribune
August 5, 2016

http://www.duluthnewstribune.com/news/4089217-judge-approves-500000-duluth-diocese-legal-bills

Legal fees are continuing to mount for the Diocese of Duluth in wake of a $4.9 million verdict in a child sexual abuse case that led to a bankruptcy filing last year.

On Thursday, U.S. Bankruptcy Judge Robert Kressel approved payments totalling more than $500,000 to five law firms.

The diocese filed for Chapter 11 bankruptcy in December, and a judge is required to sign off on all operating expenses while it remains under court protection. The payments will compensate the firms for work completed through the end of May.

The vast majority of the funds are going to four law firms retained by the diocese, while approximately $62,000 is going to compensate the attorneys for a creditors’ committee, which represents the interests of 125 people who have filed child sexual abuse claims against the diocese.

The diocese said it was forced to enter bankruptcy protection following the major verdict handed down by a St. Paul jury in November. The case was the first to go to trial under the Minnesota Child Victims Act, which temporarily lifted the statute of limitations for victims of decades-old abuse cases to file suit.

A diocese official testified at a February hearing that the diocese typically breaks even on an annual budget that is based on operating revenues of about $3.5 million. The diocese has reported debts of approximately

$12 million, far exceeding its reported assets of about $5 million.

An Arizona bankruptcy judge presided over preliminary mediation discussions between the diocese and its creditors last month. Both sides have expressed a desire to reach a settlement, as has been the case in previous diocesan and religious order bankruptcies.

The diocese in June filed a federal lawsuit against five insurers — a measure supported by victims’ attorneys — in an effort to force coverage of legal expenses and any judgments entered against the diocese.