Catholic Diocese of Wilmington Releases Bankruptcy Plan

By Sean O'Sullivan
News Journal
September 22, 2010

Wilmington Bishop Francis W. Malooly said that today's release of the diocese's re-organization plan was a requirement of the bankruptcy proceeding, but that it was not a signal that the diocese has given up on reaching a settlement with abuse survivors. (News Journal file/FRED COMEGYS)

The Catholic Diocese of Wilmington today released its bankruptcy re-organization plan, which follows last year’s declaration of bankruptcy on the eve of what was to be the first of more than 100 civil trials seeking damages by individuals who charged they were abused by priests.

Wilmington Bishop Francis W. Malooly and diocese attorney Anthony G. Flynn said that deadlines in the bankruptcy proceeding dictated that they had to release such a plan at this time, and it was not a signal that the diocese has given up on reaching a settlement with abuse survivors.

"While the plan is not supported by all creditors at this time, its filing comes after months of negotiations," said Malooly in a statement, adding "substantial progress was made" in mediation, though no resolution has been reached. "A global settlement remains our goal, and negotiations ... are ongoing," he said.

But attorney Thomas Neuberger, who plans to hold a press conference later today to react to the 40-page document, charges that the plan is "a mean-spirited, vindictive, hypocritical act, maliciously intended to prolong the suffering of survivors."

In short, the plan lays out that the diocese plans to put all assets – including all cash and real estate holdings held by the diocese and any money from diocese insurance policies – into a "pot" of funds that will then be divided up among the diocese's creditors, which include the 151 individuals who have legal claims against the diocese.

The value of funds from the diocese's insurance is not know, said Flynn, and may end up being the largest part of the pot.

There is also the issue of a pooled investment account that the diocese shared with individual parishes and other affiliates. Bankruptcy Court Judge Christopher S. Sontchi has already ruled that it should be included, but the diocese is appealing that ruling.

Those that can make claims from the "pot" will include parishes seeking to get money back from the pooled investment account.

The plan will have to be approved by Sontchi before it goes into force, a process that is expected to take at least three to four months.

Neuberger, in a press release issued this morning, pointed out that the plan does not put restoration of the victims first, "but subordinates their claims below those of 57 parishes, other catholic affiliates."

Malooly said that the plan will allow the diocese to "fulfill its legal and moral obligation to survivors, while continuing our charitable, educational and spiritual ministries."

"There should be no tension between our obligation to compensate those who have suffered so grievously by priests in whom they placed their trust, and our duty to continue the works of the Church in this diocese," Malooly concluded.

All parties involved in the bankruptcy proceeding are scheduled to meet with Sontchi tomorrow for a status update.

Contact Sean O’Sullivan at 324-2777 or


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