Sex Abuse Lawsuits Drive Another Diocese into Chapter 11

By Pat Holohan
Deal Pipeline
November 13, 2013

The Roman Catholic Church of the Diocese of Gallup has filed for Chapter 11 as it deals with at least 13 sexual abuse lawsuits dating to the 1950s.

The diocese on Tuesday, Nov. 12, submitted a petition in the U.S. Bankruptcy Court for the District of New Mexico in Albuquerque. In a Tuesday declaration, Bishop James S. Wall said the diocese filed for bankruptcy to settle abuse claims.

"The process of Chapter 11 will open our diocese to unprecedented public scrutiny which I [believe] would be a good thing," Wall said in a Monday statement. "I am firmly convinced [of this fact] as we embark on this journey to bring healing to all who have been harmed and to our diocese."

The lawsuit count does not include cases that have already been settled, claimants that have not yet filed lawsuits and claims that were reported but not pursued, court papers show. Diocese spokeswoman Suzanne Hammons said she did not have official figures on the total number of abuse claimants but said the organization would soon be filing further information.

Judge David T. Thuma is set on Friday to consider joint administration of the diocese's case with that of the Bishop of the Roman Catholic Church of the Diocese of Gallup.

Hammons said it is not yet clear whether the diocese will seek debtor-in-possession financing.

Wall in court papers said most of the alleged abuse occurred in the 1950s and 1960s but that some cases occurred in the 1970s. Claims from Oct. 1, 1965, through Dec. 1, 1977, are covered through an insurance policy withNew Mexico Property and Casualty Insurance Guaranty Fund. Following 1977, claims are covered through Catholic Mutual Group.

The bishop said the diocese has since implemented the U.S. Conference of Catholic Bishops' Charter for the Protection of Children and Young People, created in June 2002. Abuse prevention programs in the charter include background checks on adults who work with minors, a child safety director and a sexual abuse training awareness program.

"All of these programs and services provided by RCCDG are critical and must continue to be funded and maintained so that what happened decades ago cannot be allowed to happen again," Wall said in the declaration.

The diocese also will provide counseling services.

The Gallup diocese is the nation's poorest, according to court papers. Wall said 43% of the diocese's population lives under the poverty level. There are seven distinct American Indian tribes in the diocese, with the unemployment rate in those areas at 40%.

Founded in 1939, the debtor publishes the Voice of the Southwest newspaper and owns Gallup Catholic School and Sacred Heart Retreat Center.

The diocese has 38 active priests and five seminary students, with 50 other employees.

The diocese listed $500,001 to $1 million in assets and liabilities in court papers.

Its largest unsecured creditors are the Roman Catholic Church of the Diocese of Phoenix (owed $200,000), Guest House ($35,000), the Archdiocese of Santa Fe ($29,000), Bank of America NA ($17,767) and St. Luke Institute ($15,410).

Debtor counsel Susan G. Boswell of Quarles & Brady LLP declined to comment on the case.


















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