Stockton Diocese, Liable in Abuse Cases, Wins Initial Bankruptcy Approval

Wall Street Journal

Jan. 28, 2014

The Roman Catholic Diocese of Stockton, Calif., which is the 10th Catholic diocese in the U.S. to enter Chapter 11 protection as a result of increasing sexual-abuse claims, has received a judge’s approval of its initial bankruptcy requests.

The ruling by Judge Christopher M. Klein of the U.S. Bankruptcy Court in Sacramento, Calif., on Friday will allow the diocese to continue to pay its 37 salaried employees and seven hourly employees, according to court papers. Judge Klein is also overseeing the Chapter 9 bankruptcy case for the city of Stockton.

These so-called first-day motions ease the company’s transition into Chapter 11 protection, allowing it to pay some debts, arrange financing and maintain existing operations. The bankruptcy filing will allow the diocese to discharge liabilities stemming from sexual-abuse allegations and set up a trust for victims to receive compensation.

Earlier this month, Bishop Stephen E. Blaire announced the diocese’s plan to file for bankruptcy.

“Very simply, we are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse,” he said.

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