Diocese seeks Chapter 11 protection in sex abuse cases

WILMINGTON, Delaware Mon Oct 19, 2009 3:46pm EDT

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WILMINGTON, Delaware (Reuters) - Delaware's Roman Catholic Diocese of Wilmington filed for Chapter 11 bankruptcy protection to block the start of the first civil trial relating to more than 140 sex-abuse claims against diocese priests.

The diocese became the seventh in the United States to seek bankruptcy protection and its filing on Sunday put on hold the scheduled start of eight consecutive civil trials relating to a defrocked priest.

An attorney for the victims called the bankruptcy part of a cover-up. But the church said it was the best way to resolve the cases fairly.

"This was the best path to achieve healing reconciliation and fair compensation for all the victims of child sexual abuse by clergy in this diocese," Wilmington Bishop W. Francis Malooly told a news conference on Monday.

The diocese is facing claims from 142 alleged victims of sexual abuse. Malooly said he was forced to opt for bankruptcy after talks to settle claims failed, which raised the prospect of eight trials that stood to deplete the diocese's resources and leave nothing for other victims.

Malooly said three years ago his predecessor, the late Bishop Michael Saltarelli, released the names of 18 priests who had admitted, corroborated or otherwise substantiated allegations of abuse of minors.

An attorney for the victims accused the church of trying to hide the truth.

"This filing is the diocese's last, desperate effort to hide the truth from the public and conceal the thousands of pages of scandalous documents and stunning testimony," said a statement from Thomas Neuberger of The Neuberger Firm.

One victim, former altar boy James Sheehan, has already asked the bankruptcy court to allow his civil trial to begin in November as had been scheduled, due to his failing health.

In a court document, Sheehan's attorney said in similar Chapter 11 cases, dioceses used bankruptcy to delay civil trials as long as possible while negotiating with insurers.

"Sheehan is unlikely to survive that process," the document said.

BISHOP HOPES TO SETTLE QUICKLY

Malooly said the bankruptcy should be the quickest way to settle all the claims. "We hope this goes very quickly and very equitably," he said.

The 140-year-old Wilmington diocese serves 233,000 Roman Catholics and covers 58 parishes and 27 schools in Delaware and part of Maryland.

The archdiocese of Portland, Oregon, became the first to file for Chapter 11 in 2004, followed by the diocese of San Diego; Tucson, Arizona; Spokane, Washington; Davenport, Iowa; and Fairbanks, Alaska.

The Roman Catholic Church has been rocked by cases of sexual abuse by priests around the world in the past decade and the church's response to the charges often set off accusations of cover-ups.

In the United States, Boston's Cardinal Bernard Law, then the most senior Catholic official in the country, resigned in 2002 over his handling of sexual abuse cases. The Los Angeles archdiocese paid $660 million to 500 abuse victims in 2007 in the largest compensation deal of its kind.

The abuse case scheduled to begin in Delaware on Monday was filed by a 57-year-old man who said that when he was an altar boy he was abused by Francis G. DeLuca, a defrocked priest who worked in the diocese for 35 years and is involved in at least 20 cases.

In the filing with the U.S. Bankruptcy Court for the District of Delaware on Sunday, the diocese listed estimated assets of $50 million to $100 million and estimated liabilities of $100 million to $500 million.

The case is Catholic Diocese of Wilmington Inc, U.S. Bankruptcy court, District of Delaware, No 09-13560.

(Additional reporting by Sakthi Prasad and Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast and Cynthia Osterman)

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