http://www.dioceseofspokane.org/BW_2004/press111004.htm

Good afternoon. Thank you for coming.

I’ve asked you to come today for a very important announcement: The Catholic Diocese of Spokane Washington is filing for Chapter 11 Reorganization in Federal Bankruptcy Court for the Eastern District of Washington. This filing will take place on or before Monday, November 29, 2004.

There are two reasons for doing so.

Chapter 11 Reorganization will provide a fair, just, and equitable mechanism for the payment of valid claims against the Catholic Diocese of Spokane, while allowing us to maintain the historic mission of the Catholic Church in Eastern Washington. These two goals have been, are, and will continue to be our primary goals.

No process can guarantee justice. The Chapter 11 Reorganization process does, however, provide a framework for the fair resolution of valid claims. We have identified approximately 125 potential claimants who believe they were victimized by priests serving in Eastern Washington. Approximately half of those 125 have retained legal counsel. Those claims are in various stages of litigation. Chapter 11 means that all of the individuals who have suffered actual harm by the Church can be brought to the same stage, regardless of when the claim was discovered or where it is in the claims process. Chapter 11 protects those who have been harmed from losing a race to the courthouse. All valid claims will be treated equally.

We have an essential obligation to treat victims fairly. Let me remind you that we are striving to achieve fairness for 125 people, as well as those who might come forward in the future. Although some plaintiff counsel seek that same goal of fairness, they might be making that assertion on behalf of only a few individuals. We are working on behalf of more than 125 individuals. And, as I’ve mentioned already, there may be other victims who have yet to step forward, of whom we are not yet aware.

We have a sacred responsibility to preserve the mission and ministry of the Catholic Church in Eastern Washington. This Church has been a positive presence in this region since the first Mass was celebrated, in 1838, near Kettle Falls. The Catholic Diocese of Spokane includes over 90,000 members. Over the past 160 years we have ministered to hundreds of thousands of people of every denomination, and of no denomination. We have a duty to protect this ministry, a ministry so many have sacrificed so much to build. Catholic-related ministries in this region provide health care, education, and social services to the most needy members of our community. Because we have a sacred responsibility to preserve the Church as an institution, we have a fiduciary responsibility to determine which claims are valid, and which are not.

We are blessed with dedicated, hard-working, loyal employees who sacrifice every day on behalf of the Church. We have an obligation toward them as well, and to their families: Employees who count on us for their paychecks, for their benefits.

We are not a wealthy diocese. What we have been given, we have used for the ministries of the Church. People have been incredibly generous these many years. That generosity has had an impact, not just on the Catholic community, but on all of Eastern Washington.

By filing for Chapter 11 Reorganization, we will temporarily stop litigation. Likewise, it will stop the expense of litigation. All claims will be presented in one court, and will be examined by one standard. All claims will be treated equally, fairly, with justice. The diocese will continue its ministry and mission.

In the end, Chapter 11 Reorganization also will give everyone – both the victims and the diocese – a sense of finality and closure, with fairness, justice, and equity. Valid claims will be settled; the diocese will continue its ministry.

With me today is Shaun Cross, an attorney representing the diocese in the Chapter 11 Reorganization.

Questions and Answers Regarding Possible Chapter 11 Filing

1. Is the Diocese still open to settlements, prior to the filing of Chapter 11 Reorganization?

Yes.

2. When do you plan to file for Chapter 11 Reorganization?

Monday, November 29, 2004.

3. Does the Chapter 11 Reorganization have an impact on the recent Campaign for the Education of Seminarians?

That fund-raising effort, the Campaign for the Education of Seminarians, is part of the Catholic Foundation, which is a separate non-profit 501(3)(c) organization. The Foundation is not affected by this filing.

Catholic Charities also is a separate non-profit 501(3)(c). Catholic Charities is not affected by this filing.

4. How could the diocese possibly be insolvent, with parishes, schools, and other entities, such as orphanages, all over Eastern Washington?

They are separate, independent entities. With this filing, we seek to protect parish and school properties.

5. Doesn’t filing a Chapter 11 petition send the signal that the Diocese is more concerned about money than it is about justice for the victims?

No. A Chapter 11 Reorganization may be the only way to achieve fairness, justice, and equity for all of the victims of abuse, not just those who have filed suit. Fairness, justice, and equity does not mean a lottery, nor does it mean a race to the courthouse. Fairness, justice, and equity means those in the door last are treated as equitably as those in the door first, that there are rules and processes established which strive for fairness to all parties. A Chapter 11 Reorganization plan would ensure equal treatment for those who suffered comparable harm, regardless of when the claim arose and where the claim is in the litigation process.

The Chapter 11 Reorganization process also includes a claims bar date. A claims bar date would provide finality for everyone.

A Chapter 11 Reorganization plan provides the best opportunity for the Diocese of Spokane to continue its ministry and mission in Eastern Washington.

6. Under a Chapter 11, will my parish or school continue to operate as usual?

We expect that the parishes and schools of the Spokane Diocese will continue to operate as usual.

7. How much money are the various plaintiffs seeking?

Damage claims vary from claim to claim. Collectively, the total of claims is in the tens of millions of dollars. That far exceeds the net worth of the diocese. Many of the victims have declined to seek any monetary compensation whatsoever. Some victims have accepted the Church’s offer of assistance and payments for counseling. Others have exercised their legal right to secure counsel and are seeking damages against the Diocese. Bishop Skylstad has made it clear that the Church has a moral obligation to assist the victims of abuse to the best of its ability and to help the process of healing begin, while continuing the ministry of the Church in Eastern Washington.

8. Does the Diocese have any insurance for the payment of any claims?

The Diocese has maintained insurance coverage with several different carriers over the years. The defense of most of the claims, including the payment of the majority of the attorneys fees in defending the Diocese, have, at least to this point, been covered by the insurance carriers. The Diocese continues to work with its various carriers towards the full resolution of the claims.

9. Is the retirement plan for the employees of the parishes, schools and the Diocese subject to the claims of creditors?

No. The plan should not be subject to the claims of creditors.

10. Where can I find additional information regarding these issues?

In the days ahead we will have more information on the Diocese's web site.