Saturday, November 21, 2009

ONGOING COVERAGE: SPOKANE DIOCESE BANKRUPTCY

Judge praises diocese deal

Bankruptcy case may end by spring

Also see press release Read bankruptcy plan of reorganization

John Stucke
Staff writer
January 6, 2007

A $48 million settlement designed to pay victims of clergy sex abuse should help end the Catholic Diocese of Spokane bankruptcy this spring, a federal judge said Friday.

"As you well know I was pushing very hard to get this case resolved by this time," U.S. Bankruptcy Judge Patricia Williams said during a 90-minute hearing in Spokane. "I am very pleased that the proponents of the plan have managed to negotiate and agree upon the plan's terms."

The rare praise offered by Williams underscores the relief among Catholics and everyone involved that the end may be in sight for the long-running bankruptcy.

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Williams ordered Bishop William Skylstad, parish leaders and victims into mediation last summer. Though it took six arduous months of negotiations, the deal announced this week is expected to help close the sad chapter for the diocese of 90,000 Catholics and 82 parishes across Eastern Washington.

The 3 1/2 months it will take to file documents supporting the plan, respond to problems and hammer out final details should pose few problems, said lawyers who mediated the settlement. Hearings to confirm the plan and settlement are scheduled April 24-25.

"Even though it will take another three or four months until we get a final resolution," Williams said, "that is time well spent because the parties collectively controlled their own destiny rather than have me and an appellate court control their destiny."

People or groups with a stake in the bankruptcy will be allowed to object to the plan.

A disclosure statement, or plan prospectus, will be filed in early February.

The plan requires parishes to raise $10 million toward the settlement. Church properties will be used as collateral.

Also, four of the largest Spokane parishes, along with the Immaculate Heart Retreat Center, are being asked to secure a separate $5 million note required of Skylstad. Those parishes are Our Lady of Lourdes downtown; Assumption of the Blessed Virgin in northwest Spokane; St. Augustine on the South Hill; and St. Mary in Spokane Valley.

Parish financial support of the settlement for more than 125 victims makes the Spokane case unusual.

For example, the Los Angeles archdiocese agreed last month to pay $60 million to settle 45 sex abuse lawsuits.

The $75 million settlement to end the Archdiocese of Portland bankruptcy, which included about 150 victims, did not include money from parishes. A $100 million settlement paid by the Diocese of Orange, in Orange County, Calif., did not include parish money. Nor did the $85 million paid by the Archdiocese of Boston to settle sex abuse claims there.

Parishes did contribute $2 million to the Diocese of Tucson, Arizona's $22.2 million settlement reached in 2005 for 77 victims.

If approved, the Spokane settlement ensures that parishes and individual parishioners could not be sued by sex abuse victims. Future sex abuse claims would be paid from a special fund.

One sticking point yet to be resolved is attorney fees. Diocese records through Nov. 30 show accrued legal fees of about $5.6 million.

The U.S. Trustee's Office will review the fee applications, and the judge must ultimately award the money.

Lawyers involved in the settlement remain under a gag order issued by the federal mediator, U.S. Bankruptcy Judge Gregg Zive of Nevada.