Tucson Diocese Bankruptcy Effectively over a Year Later

By Arthur H. Rotstein
Associated Press, carried in Post-Intelligencer [The Seattle WA]
September 18, 2005

TUCSON, Ariz. -- A year ago Tuesday, the Roman Catholic Diocese of Tucson was driven to bankruptcy by claims of clergy sex abuse, but the anniversary of the filing could also be the day the diocese emerges—a quick resolution to a difficult case, bankruptcy experts say.

United States Bankruptcy Judge James M. Marlar approved the diocese's Chapter 11 reorganization plan in July, which will make $22.2 million available to settle court-approved claims by 31 victims of sex abuse by priests. A few more victims may be added, and future claims, including on behalf of minor children, are possible but not highly likely.

Susan Boswell, the diocese's lead bankruptcy lawyer, said she hoped the settlement trust would be funded Tuesday, officially freeing the diocese from bankruptcy. The trust will provide initial payouts of up to $600,000 to the victims, who are likely to receive more money later from a fund set aside for possible future claimants.

Bankruptcy specialists consider resolving such a case so quickly extraordinary. Contentious bankruptcy reorganizations involving the Portland, Ore., and Spokane, Wash., dioceses, filed before and after Tucson's filing last year, remain far from resolution.

To resolve any complex Chapter 11 case, even without the emotional issues involved in the abuse claims, in less than a year is "remarkable," said Boswell.

She said they were able to resolve the case quickly because everyone wanted fair treatment for the victims and change within the church. "Victims were not looking to destroy the church," she said.

Lawyers and Bishop Gerald F. Kicanas praised Marlar's firm but fair guidance and his ability to keep everyone focused on a reorganization plan providing a settlement agreement.

"He treated the victims with complete respect in the courtroom, and spent more time than I've ever seen a judge spend, trying to address the concerns of the victims, whether they were legally valid or not," said Lynne Cadigan, who had sued on behalf of many of the victims before the bankruptcy filing.

Cadigan said she was skeptical of the bankruptcy filing, "convinced that it was just another scam to defraud the victims." She added, "I never thought it could be resolved as amicably as it's being resolved today."

Marlar, in e-mail response to questions by The Associated Press, said the experienced lawyers helped ensure the resolution occurred quickly.

"The attorneys involved were all experienced bankruptcy lawyers who knew, liked and respected each other and their legal abilities," he said. "As a consequence, there was no unnecessary 'posturing' and they quickly identified the legal problems that needed to be solved, and worked toward resolving them by consent, rather than by litigation."

Marlar said he tried to steer the lawyers clear of arguments over whether parish properties should be considered in the settlement, which would have resulted in protracted litigation—as has occurred in Portland's case.

He also wanted to quickly identify how many possible abuse victims with claims there were to "give everyone a ballpark estimate of the dollars needed to satisfy those claims."

"Sometimes it's better to try and envision the end result and work backwards from there," he added.

Bishop Kicanas said the victims also were focused on a fair and fast resolution to the case. "That the victims have expressed a sense of fairness and justice and can now move on with their lives is very encouraging," he said.

The victims were practical, not vengeful, Kicanas and others pointed out.

"They wanted the church to acknowledge its sin but they also wanted the church to continue to serve the people," said A. Bates Butler III, who represented unknown future claimants.

"We felt we needed to try to resolve it, get it behind us and move on"—despite heated arguments, said Tom Groom, a Clarkdale accountant who was a victim representative on the creditors' committee.

Parishioners, who have watched the Catholic Church nationally hit by abuse scandals, are relieved to have the Tucson case resolved, Kicanas said.

At Our Mother of Sorrows Elementary School on Tucson's southeast side, Dr. Scott Wilson, kissing his three children as he dropped them off, said he was glad the bankruptcy has been resolved but disappointed that it had to happen.

"I understand it was just a decision that was made in order to deal with the complaints that were made in the past," he said.

Another parent, Lety Yzabal, said she was proud to send her children to the parochial school and that the diocese was doing its best in settling.

"They're trying to correct the problem," she said. "They're taking a lot of safety precautions, so I'm pleased with the outcome."

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