Archdiocese of Portland Files Chapter 11 Bankruptcy

By Ed Langlois
Catholic Sentinel
July 7, 2004

http://www.sentinel.org/articles/2004-27/12880.html

Facing financial pressure from impending trials on sex abuse claims, the Archdiocese of Portland Tuesday filed for Chapter 11 bankruptcy.
It is the first Catholic diocese in the United States, and perhaps the world, to seek the legal protection.

The move, described as a last resort, means that multi-million-dollar suits now pending against the archdiocese will be settled in federal bankruptcy court along with possible future claims.

Parish and school activities and ministries based at the archdiocese will continue, officials say.

“This action offers the best possibility for the archdiocese: to resolve fairly all pending claims, to manage a difficult financial situation and to preserve the ability of the archdiocese to fulfill its mission,” Archbishop John Vlazny said at a press conference, backed by Archdiocese of Portland officials and advisors. “It will also allow us to continue our good works without fear of an impending large verdict.”

Two abuse trials were set to begin just hours after the announcement, but were halted. The plaintiffs were seeking a total of $155 million.

The archdiocese has settled more than 100 other claims and says it has made efforts to settle these claims as well.

“I am committed to just compensation,” the archbishop said in a letter sent to parishes this week. “These demands go beyond compensation. With 60 other claims pending, I cannot in justice and prudence pay the demands of these two plaintiffs.”

Over the past four years, the archdiocese and its insurers paid $53 million for the more than 100 claims, the highest per-capita payments made by any diocese.

“We have kind of emptied the pot,” Archbishop Vlazny told reporters, adding that it has been difficult to borrow money.

The two suits about to begin named the late Maurice Grammond, a former priest of the archdiocese. Almost 50 people have claimed that Grammond molested them. The incidents go back to the 1950s.

The archbishop — who went through a trial of an accused priest when he was bishop in Winona, Minn. — said going to court is hard on both the victims and the defendants.

He also noted the “great financial risk” posed by the trials, saying defense attorneys might try to claim parish assets, school money and trust funds for their clients.

The archbishop described bankruptcy as the best choice “if I am to be a prudent steward of our resources.”

He said the archdiocese has been “abandoned” by insurers and expressed hope that the bankruptcy will bring the companies back.

“Parish assets are not the archdiocese’s assets,” the archbishop said, citing canon law.

Late last month, Bishop Gerald Kicanas of Tucson, Ariz., said that bankruptcy was the only option available to his diocese. There, 100 people had alleged abuse against 126 priests.

The idea of bankruptcy sparked protests in Arizona. Critics said it allowed the church to avoid its responsibilities. But like Archbishop Vlazny, Bishop Kicanas described bankruptcy as the only way to ensure the ability to respond to the bulk of legal demands.

The archbishop reported that some Catholics have told him they have stopped donating to the archdiocese because of the claims. But, he said, other donors have increased giving and new contributors have stepped forward.

Collections have increased for the annual Archbishop’s Catholic Appeal, which supports people with disabilities, family life ministry, seminary education, Catholic schools, youth ministry, support for ethnic groups and other projects.

The archbishop urged parishioners to maintain their support.

He told reporters that he consulted during the holiday weekend with mostly-lay financial advisors and a clergy panel and others before taking the bankruptcy step.

One man picketed outside the pastoral center during the press conference.

“I am here for victims all over the U.S.,” said Norman Wick Sr., a Portlander who has a claim pending against a priest and several women religious in Albany, N.Y.

As he has many times, Archbishop Vlazny again apologized to those harmed by abuse, saying the bankruptcy filing will help him “renew my commitment to help you to heal.”

As he opened the press conference, Archbishop Vlazny noted he had just presided at a Mass celebrating the feast day of St. Maria Goretti. In 1902, the 12-year-old Italian girl was slain by a would-be sexual abuser.

When St. Maria was canonized in 1950, the killer knelt with the girl’s mother at the grave and prayed.

“That,” the archbishop told the press corps, “is the kind of healing and reconciliation we are trying to accomplish.”