October 21, 2009 / 8:12 PM / 10 years ago

Alleged victims, bankrupt diocese in U.S. court

WILMINGTON, Del., Oct 21 (Reuters) - The bankrupt Catholic Diocese of Wilmington began its court fight on Wednesday with victims claiming sexual abuse by its priests over the value of its estate and how much will be available for claims.

Attorneys for most of the 142 victims indicated they may seek to expand the bankruptcy to include parishes that operate in the Delaware-based diocese but were not part of the Chapter 11 bankruptcy filing on Sunday.

The attorneys for the diocese pledged an open process that they said would be the quickest way to resolve the claims that stem from alleged abuse beginning as far back as 1954.

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

Attorney James Patton, representing the diocese, opened the hearing by acknowledging the abuse by priests.

“This arises out of terrible pain and breach of trust. That sin was compounded by other church officials,” he said.

The hearing addressed mostly routine issues such as the diocese’s use of its bank accounts.

Attorneys for alleged victims may ask to expand the bankruptcy to all entities in which the bishop had control over funding, which they say included parishes that run individual churches.

Attorney Thomas Neuberger, who represents alleged victims, said while the diocese was rich, there is a wealth of assets among the parishes as well.

“We want those parish assets included,” he said.

The 140-year-old diocese listed assets of more than $50 million in court documents. With 233,000 Roman Catholics, it covers 58 parishes and 27 schools in Delaware and Maryland.

While Bishop Francis Malooly did not attend, one victim of sexual abuse, James Sheehan, did, with the help of a walker.

Sheehan, who said he was abused when he was an alter boy, requested that his civil case proceed against the diocese. A state court expedited his case due to his failing health.

The diocese also requested a temporary restraining order to prevent the civil cases from proceeding against religious orders and parishes, which are not part of the bankruptcy, although they operated within the diocese.

A hearing on their requests was set for Nov. 2.

J. Michael Reck, an attorney representing victims of sexual abuse, said outside the hearing that the parishes, schools and religious orders could end up in the bankruptcy without a restraining order.

Editing by Ellen Wulfhorst and Cynthia Osterman

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