Spokane Diocese Emerges from Chapter 11 Bankruptcy

Associated Press, carried in Bellingham Herald [Spokane]
June 1, 2007

The Catholic Diocese of Spokane has emerged from bankruptcy 30 months after filing for Chapter 11 protection from lawsuits over past clergy sex abuse. Now, Bishop William Skylstad and parishioners must raise $48 million to settle victims' claims.

"This is the end of a difficult chapter for the diocese and the start of a new day for it," diocese bankruptcy lawyer Greg Arpin said Friday. "We're very pleased to come out of this tragic and difficult period, and looking forward to a new life for the Catholic Church in Eastern Washington."

Skylstad, president of the U.S. Conference of Catholic Bishops, had no immediate comment, diocesan spokesman the Rev. Steven Dublinski said Friday.

Paperwork certifying that the 95,000-member diocese had complied with requirements set forth in a bankruptcy reorganization plan was e-mailed to lawyers at 4:10 p.m. Thursday, effectively marking the end of bankruptcy, Arpin said.

Arpin said the next step is to pay for the plan, which calls for dividing $48 million among about 175 people who claimed they were sexually abused in the past by priests or nuns in the diocese. The majority of claims involved sexual molestation of boys by priests, about nine of whom have been publicly identified.

Among the claims: a woman who said she was sexually abused by Skylstad in Spokane in the early 1960s. Skylstad has denied violating his vow of chastity and said an investigator hired by his lawyer found no credence in the woman's story.

Shawn Cross, another bankruptcy lawyer hired by the diocese, said he had no specifics on that claim, except that it "is not one of the ones rejected to date. It is going through the process."

About 35 claimants who reached settlements with the diocese will receive payments within 45-60 days, while the remainder - about 141 - will begin receiving payments by the end of the year, Arpin and Cross said. Another blanket claim covers people who come forward in the future.

Individual claimants will receive $15,000 to as much as $1.5 million, depending on the severity and length of abuse. A former U.S. attorney is reviewing each claim to determine the amounts to be paid.

Insurance settlements of $20 million were forwarded to a bankruptcy trustee on Thursday.

Skylstad is raising another $18 million through sales of property, and contributions from Catholic entities and loans, while parishes are raising another $10 million. Cross said nearly $24 million has been raised so far, with another $6 million from Catholic entities expected to be transferred to the trustee next week.

Millions of dollars the diocese is paying lawyers will come off the top of the settlement pool. A bankruptcy judge will decide the amount of lawyers' fees.

Bob Hailey, a Spokane lawyer who is co-chair of a capital campaign by the diocese's 82 parishes to raise their share of the settlement, said the effort was going "quite well." Parishes have an incentive to raise the money by Oct. 1, because interest begins accruing then, Cross said.

The Spokane diocese is the third of five U.S. dioceses to emerge from Chapter 11 bankruptcy. The others are Portland, Ore., and Tucson, Ariz. Dioceses in San Diego and Davenport, Iowa, are still in bankruptcy.

The Spokane diocese and most others in the U.S. have implemented new rules for reporting and dealing with clergy suspected of abusing children.

Mike Shea, whose May 2002 lawsuit alleging he was molested in 1956 at St. Augustine Parish in Spokane helped to force the bankruptcy, said Friday he is satisfied with the outcome.

The settlement requires Skylstad to write letters of apology to victims and their families, allow victims to tell their stories in parishes where abuse occurred and to publicly support efforts to eliminate statutes of limitations on child abuse crimes.

"I accomplished what I wanted to do. What I wanted to do was to expose them, and boy, we did that," Shea said. "I want the truth. I want it exposed to make sure it doesn't happen again."

Shea isn't sure if he will ask to address parishioners at St. Augustine.

"If I can see it might do some good, I think I'll do it," he said. "If we could wake up one more parent to keep an eye on their children, then it would be worth it."


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