Jesuit Bankruptcy Brings Anxiety to Catholic Institutions

February 3, 2009

Attorneys have begun the long process of adding up the assets and debts of the Oregon Province of the Society of Jesus. The Jesuit order based in Portland recently declared bankruptcy. The Jesuits have already settled about 200 claims of clergy sex abuse. But even more victims are suing, saying they were abused by priests when they were children. One big question in the bankruptcy case is how much is the Oregon Province of the Jesuit order worth? Inland Northwest Correspondent Doug Nadvornick looks at the issue from one Jesuit institution, Gonzaga University in Spokane.

On a chilly weekday afternoon, young men dressed in long–sleeved jerseys and shorts do battle on a muddy Gonzaga University field. Rugby players take turns pummeling each other to the ground. Students walking by glance at this spectacle, then move on.

This is everyday life at Gonzaga where the big news on campus is that the men's basketball team has won yet another league championship. The Oregon Province bankruptcy is barely a blip on the radar.

Senior Peter Zysk has paid some attention. He hopes money from the university won't be re–routed to the Oregon Province to pay legal claims.

Zysk: "It would be unfortunate and a wrong use of our resources because this is private donor money and student money and even some revenues that are generated by the university itself."

There's a lot of money at Gonzaga. Just look around campus. The basketball arena opened a few years ago; a new baseball stadium last summer. New dorms and apartment buildings are going up. The university says it received 17 million dollars in gifts last year.

So when the Oregon Province of Jesuits declared bankruptcy, university administrators rushed to say the school's assets are not on the table. Gonzaga argues that even though Jesuits run the place, they don't own the place.

But John Manly, a southern California attorney who represents dozens of alleged victims, says yes, they do own it.

Manly: "The Gonzaga argument about it's not really part of the Oregon Province is like Pontiac arguing it's not really part of General Motors. Yeah, it may be a separate corporation, but it functions as part and parcel of the same organization."

Manly and other victims' attorneys argue the Jesuits have always occupied the president's office. They appoint the board of trustees. They determine university policy and decide how to spend the money. So he says it's hard to argue there's an arms–length relationship.

Attorneys for Gonzaga and the Oregon Province either didn't return our calls or they referred us to statements on their websites.

They will be making their case before federal Bankruptcy Court Judge Elizabeth Perris in Portland. Watching from the outside will be Willamette University Law School Professor Richard Hagedorn.

Hagedorn: "The most similar case law that might relate here are the archdiocese bankruptcies."

Those are the archdiocese bankruptcies in Portland and Spokane. Judge Perris presided in Portland. In that case, she sided with victims' attorneys and ruled the archdiocese is the legal owner of its parishes.

As for the Jesuits, the fate of Gonzaga University and other institutions may be a long way off. Reorganizing the Oregon Province's finances is expected to take months or even years.

Victims' attorney John Allison of Spokane says outside parties are getting their first look at the Jesuits' holdings.

Allison: "We're talking about mutual funds and we're talking about real estate throughout the Northwest in Spokane and Seattle and Portland. Some of these properties well over a million dollars in value."

Allison represents more than two dozen people who claim priests sexually abused them at an Indian school near Omak, Washington.

Morning mass at St. Aloysius Church. This is the spiritual center of the Gonzaga campus.

People here say they're sorry about the sexual abuse scandal, but they're nervous that Jesuit assets are on the table at all. Those include Seattle University across the state and Jesuit high schools throughout the region. The Oregon Province of the Society of Jesus includes Oregon, Washington, Idaho, Montana and Alaska.

I'm Doug Nadvornick in Spokane.


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