Fairbanks Catholic Diocese Selling Assets under Bankruptcy Plan

By Mary Beth Smetzer
April 2, 2009

FAIRBANKS — A little more than a year since declaring Chapter 11 bankruptcy, the Fairbanks Catholic Diocese filed a reorganization plan Tuesday with the U.S. Federal Bankruptcy Court.

In the past 13 months, the diocese has worked out a plan to mortgage or sell church properties and commit to fundraising and donor appeals to establish a fund that will be used primarily to pay the claims of victims of sexual abuse.

“This is just the first step that we feel we can come up with,” said Robert Hannon, diocesan chancellor. “We project we can offer claimants more than $8.6 million.”

Projected insurance coverage is estimated at more than $20 million, he said.

The diocese, formally known as the Catholic Bishop of Northern Alaska, filed for reorganization in March 2008 after failing to settle with 140 people claiming sexual abuse by clergy or others associated with the diocese.

Since that time, the number of claimants has more than doubled to about 300.

“We are looking forward towards reconciliation and healing,” Bishop Donald Kettler stated in a press release. “We recognize the process will continue and the claimants will offer suggestions as we meet in mediation next month. Yet, I remain hopeful that we are on the road to closing one chapter on a sad part of our past.”

A successful mediation is in the best interest of the victims, said Ronnie Rosenberg, litigation coordinator for the diocese.

“The more time this goes on, the less money we have. To pursue litigation and appeals is extremely costly, and we are not a wealthy diocese,” she said.

The reorganization plan, if accepted by the court, will allow the diocese to mortgage the $1.1 million chancery, which houses its main offices on Peger Road, and the Kobuk Center, which serves as a conference center and residence for the bishop and priests. The mortgage holder would be the Catholic Order of Foresters, a benevolent fraternal organization.

The Jesuit residence and 14.5 acres on the chancery campus already serve as collateral for a $1 million loan taken out to pay legal fees.

The diocese is attempting to obtain loans for the diocesan warehouses located on the chancery campus, which serve as a staging area for supplies and materials for Bush parishes, as well as the Barnette Street building, which houses Fairbanks Counseling and Adoption Center, and the Kateri Tekakwitha Center/Convent in Galena.

To raise more cash and with the court’s approval, the diocese will sell its aircraft hangar and leasehold interest at the Fairbanks airport listed at $350,000; a vacant lot adjacent to the Catholic Schools property; a small residential convent on Betty Street, and a Harding Lake lot.

CBNA intends to sell a small Harding Lake chapel to a group of families who own vacation cabins in the area.

The diocese’ Nome radio station KNOM is in the process of being sold to a private nonprofit group that will continue to run the station for $380,600. One of the diocese’s planes has been sold and the remaining one, a 1960s era Cessna will be used as a raffle prize.

The Catholic Schools in Fairbanks aren’t included as providing income for the reorganization plan, nor the Monroe Foundation, which is restricted to funding only school concerns.

“These are the only Catholic schools in northern Alaska,” Rosenberg said. “If we were to shut down the schools that would prevent the free exercise of religion and the operation of a Catholic school to give people that option.”

In bankruptcy settlements in the Lower 48, Catholic schools have merged, which isn’t an option here. Selling parish properties or confiscating endowment funds also isn’t included in the diocese’s reorganization plan.

Rosenberg said the diocese’s 47 parishes scattered throughout the huge diocese — which stretches south from the Alaska Range, north to the Arctic Ocean and west to the Bering Sea coast — have no money. Only eight of the 47 parishes are self-supporting.

“Our position is that the parishes don’t belong to the diocese. Parish assets and parish properties belong to the parishes,” Rosenberg said.

Although endowment funds produce income, it is restricted because of donor intent, Rosenberg said, and they are not available for general operating funds or payment to creditors.

The diocese’s Pilgrim Hot Springs property, 320 acres located near Nome with geothermal potential, is up for bid for development, use, lease or eventual sale.

Rosenberg calls the reorganization plan “fair and equitable.”

“We were not operating with a lot of fat to begin with, and we have taken it down to the bone.

“We are going into mediation with an open mind and we are optimistic that it will be successful,” she said.

The diocese’s disclosure statement and supporting documentation is on its Web site,


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