By Catholic News Service
September 21, 2004

http://www.catholicnews.com/data/stories/cns/0405160.htm

TUCSON, Ariz. (CNS) -- Facing 33 plaintiffs in 22 pending clergy sex abuse lawsuits, the Tucson Diocese Sept. 20 filed for federal bankruptcy protection.

Tucson was the second diocese in the nation to seek court-supervised reorganization under Chapter 11 of the U.S. Bankruptcy Code to resolve multimillion-dollar claims against it by alleged victims of childhood molestation by priests. In July the Archdiocese of Portland, Ore., became the first major church body in history to make a Chapter 11 filing.

In a letter to his people Tucson Bishop Gerald F. Kicanas said he believed "that this represents the best opportunity for healing and for the just and fair compensation of those who suffered sexual abuse by workers for the church in our diocese -- those who are currently known and those who have not yet made the decision to come forward."

"We have been struggling to find a way -- the best way -- to respond to those who are seeking compensation for the harm they suffered, a way that also will allow us to continue the mission of the church in our diocese," he wrote.

In a separate letter addressed "to all those who have been sexually abused by a worker for the church," the bishop said that in meeting such victims he has listened to "your anger, your hurt and your sense of betrayal" from the abuse.

"This has touched my heart and left me struggling to know how best to help you heal," he wrote. "As the diocese enters the process of reorganization, again I think of you with concern and with a longing to restore your trust and heal your hurt."

Under a Chapter 11 proceeding, a federal bankruptcy court oversees the organization's finances and has veto power over any major financial transaction. Initially the court must even approve decisions on paying the regular salaries and other benefits of the organization's employees.

Like Portland, the Tucson Diocese settled a number of clergy abuse lawsuits in 2002-03 for millions of dollars but found itself faced with new claims seeking many millions more in damages.

The Portland Archdiocese filed for bankruptcy protection just hours before two lawsuits, in which plaintiffs sought a combined total of $155 million, were to go to trial. Under bankruptcy law, such lawsuits are immediately suspended and the plaintiffs become potential creditors whose claims fall under the jurisdiction of the bankruptcy court.

Similarly, the Tucson Diocese was facing an imminent trial of three abuse lawsuits when it made its Chapter 11 filing. Bishop Kicanas had said in June that the diocese was seriously considering Chapter 11 if it could not reach an appropriate out-of-court settlement of the claims.

Bishop Kicanas and his counterpart in Portland, Archbishop John G. Vlazny, said Chapter 11 was the only way they could see to continue the local church's mission and prevent its financial resources from being exhausted by judgments in the first cases to reach trial, leaving nothing in the pot for the other victims.

In its Chapter 11 filing the diocese proposed that any additional victims who have claims against the diocese should be required to step forward within 90 days or forfeit their right to do so.

In his letter to Catholics Bishop Kicanas said, "The bankruptcy court describes its mission as providing a neutral forum to all who seek protection or require resolution of disputes.

"In our present circumstances, we need that neutral forum with its protection and fair adjudication so that we can justly and equitably compensate those who have been harmed while we continue to carry out the mission and ministry of the church, including our efforts to create safe environments for children at all our parishes and schools."

Attorneys for the diocese filed the petition for Chapter 11 reorganization with the U.S. Bankruptcy Court, District of Arizona, in an electronic filing at the court's 8 a.m. opening Sept. 20. At 8:15 Bishop Kicanas met with diocesan employees at St. Augustine Cathedral and announced the decision.

He also discussed the Chapter 11 proceeding in his weekly "Monday Memo," which is posted on the diocesan Web site and sent by e-mail and fax to parishes and schools.

The diocese's audited financial report for the 2002-03 fiscal year showed $20.7 million in assets but $21.9 million in liabilities.

The diocese was formed as the Apostolic Vicariate of Arizona in 1868, which was made the Diocese of Tucson in 1897. It reached its current size of 42,707 square miles in southern Arizona in 1969, when the Diocese of Phoenix was formed in the central and northwest part of the state. Earlier, the northeastern part of the state was split off in 1939 as part of the Diocese of Gallup, N.M.

Today the diocese has about 350,000 Catholics in a total population of about 1.5 million. It has 75 parishes and more than three dozen missions, served by 67 active diocesan priests. There are also 72 religious priests in the diocese, 238 nuns, 10 brothers and 143 deacons.