Diocese of Stockton Files for Bankruptcy Protection
Cites Liabilities From Sexual-Abuse Allegations

By Stephanie Gleason
Wall Street Journal
Jananuary 16, 2014

The Catholic Diocese of Stockton, Calif., on Wednesday became the 10th Catholic diocese to file for Chapter 11 bankruptcy protection to address mounting liabilities stemming from sexual-abuse allegations.

The diocese estimated its total liabilities—including claims from alleged sexual abuse and other debt—at between $10 million and $50 million, according to documents filed with the U.S. Bankruptcy Court in Sacramento, Calif.

Bishop Stephen E. Blaire said in a news release Monday that the diocese had decided to take this action.

"Very simply, we are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse," the bishop said of the diocese's financial troubles.

Judge Christopher M. Klein, who is presiding over the Chapter 9 bankruptcy case of the city of Stockton, also will oversee the diocese's Chapter 11 case. Court documents containing a fuller picture of the diocese's property and creditors is due by Jan. 29.

Over the past 20 years, the diocese has spent $14 million on legal settlements and judgments over these allegations, it said Monday. Despite having a balanced budget overall, it doesn't have the funds available to settle currently pending lawsuits or allegations that could arise in the future, it said.

A Chapter 11 filing will allow the diocese to discharge liabilities stemming from sexual-abuse allegations and set up a trust for victims to receive compensation. The diocese said it hopes to arrive at a global resolution with victims and insurers through that process.

Nine other dioceses, including the Archdiocese of Milwaukee; the Roman Catholic Diocese of Wilmington, Del.; and the Catholic Diocese of Spokane, Wash., have similarly filed for Chapter 11 protection to resolve liabilities relating to sexual-abuse claims.

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