|Diocese Hopes to
Davenport officials say they haven't yet made a decision to file for bankruptcy protection
By Shirley Ragsdale
Des Moines Register
October 2, 2004
A day after Davenport diocese officials discussed filing Chapter 11 bankruptcy, church leaders insisted they are still trying to settle claims made by men who say they were sexually abused by priests.
"We're going to make a full and complete effort," said Rand Wonio, attorney for the diocese. "No decision has been made. We just thought people needed to know bankruptcy was being considered. We won't be making a decision until we see how much the insurance company will contribute to the settlements."
If the Davenport diocese seeks bankruptcy protection, it will be the third Catholic diocese in the nation to use bankruptcy to protect itself from multimillion-dollar abuse settlements or damages.
If the diocese decides to seek bankruptcy protection, it will have to gather detailed information about its finances, assets and debts, according to Anita Shodeen, bankruptcy attorney for Beving, Swanson and Forrest.
Just like any other corporation seeking Chapter 11 bankruptcy protection, the diocese would be required to propose a payment plan for all claims, outlining how it would take care of its creditors. Under Chapter 11, people would be unable to collect debts or take legal action against the diocese.
"The creditors have an opportunity to evaluate the plan and object, but ultimately the bankruptcy judge decides how it will go," Shodeen said.
When the Portland, Ore., Catholic archdiocese filed for bankruptcy July 6, it presented the court with a 230-page document, listing $10 million in assets. Sacred objects were not included. The diocese had already paid $16 million in settlements to 22 plaintiffs.
The Tucson, Ariz., diocese filed bankruptcy Sept. 20. It listed assets of $16.6 million and debts of $20.7 million. On Wednesday, the judge asked lawyers to discuss placing a 90-day filing deadline for any more claims of clergy sex abuse. Such a deadline would effectively cut off compensation for victims not filing.
Craig Levien, whose dozens of clients are either suing the Davenport diocese or negotiating for settlements in mediation, said Bishop William E. Franklin may be bluffing because the diocese has yet to pay any settlements or court judgments.
"This would be the only diocese in the country claiming bankruptcy
without paying one penny of its own assets," Levien said. "Davenport
has only settled three claims in its history. All three were paid entirely
with insurance money, and that was more than 12 years ago."
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