Delaware Diocese’s Payment Plan Rejected by Victims

By Steven Church
Business Week
September 25, 2010

Alleged victims of sexual abuse by priests in Delaware rejected an offer of as much as $75,000 each to settle claims against the Catholic Diocese of Wilmington, the victims’ lawyer said.

“This plan is a mean-spirited, vindictive, hypocritical act, maliciously intended to prolong the suffering of survivors,” said Thomas Neuberger, an attorney who represents 98 of the 151 sex-abuse victims with claims against the diocese in bankruptcy court.

The payment was one of three settlement options the diocese offered sex-abuse claimants under a plan to exit bankruptcy. Diocese attorney Anthony Flynn said today he expects only a “small percentage” of victims to accept that amount, which would require that a mediator appointed by the diocese verify the abuse.

“We expect the average payment will be far greater than $75,000,” Flynn said in an interview. To help raise money, the diocese has proposed selling the house occupied by Bishop W. Francis Malooly, along with other real estate, he said.

Last year, the Roman Catholic diocese became one of at least six in the U.S. to file for bankruptcy to settle lawsuits from current and former parishioners who say they were sexually molested by priests.

Settlement Trust

The Wilmington diocese didn’t say how much money it would put into a trust to pay the settlements, or whether the fund would have enough money to cover all claims. In five other diocese bankruptcies, victims were paid, on average, from $33,000 to $410,000 each, according to figures provided by the Wilmington diocese.

Under the proposal filed yesterday in U.S. Bankruptcy Court in Wilmington, sex-abuse victims who sued the diocese in state court in Delaware would have their cases closed and moved either to federal court or put before the mediator.

The plan must be approved by a bankruptcy judge after a vote of creditors, including the alleged victims. If approved, victims would have three choices: accept the $75,000 option and submit their claim to the mediator, seek a bigger amount from the mediator in a court-like proceeding, or file a lawsuit in federal court.

“While the plan is not supported by all creditors at this time, its filing comes after months of negotiations with the official creditor committees and other constituencies,” Malooly said in a statement yesterday.

The diocese will seek money from insurance companies and parishes to help cover the settlements, Flynn said. About $76 million may come from a pooled investment account. The diocese is appealing U.S. Bankruptcy Judge Christopher Sontchi’s decision to give creditors, including abuse victims and church employees with pension claims, access to those funds.

The case is In re Catholic Diocese of Wilmington Inc., 09- 13560, U.S. Bankruptcy Court, District of Delaware, (Wilmington).

--Editors: Fred Strasser, Stephen Farr

To contact the reporter on this story: Steven Church in Wilmington, Delaware at

To contact the editor responsible for this story: David E. Rovella at


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