On Thursday, Bishop William Franklin announced that the diocese lacks the financial resources to compensate victims of alleged priest abuse and warned a settlement could force the church into bankruptcy.

The Rev. Ken Kuntz of St. Mary's Church, 228 E. Jefferson St., said he was not surprised by the Bishop's announcement and had known that bankruptcy was a possibility for some time.

"I think that some people think that by declaring bankruptcy, it's the diocese's way of getting out of compensating the victims," Kuntz said. "I feel it's important for us as a church to compensate the victims, and I was told that would happen even if bankruptcy was the route the diocese would go."

Franklin also said no final decisions have been made for meeting the monetary demands set forth recently in negotiations with 37 men who claim priests sexually abused them in the last 50 years.

Davenport lawyer Craig Levien, who represents most of the alleged victims, said one of the men claimed abuse at an Iowa City parish, but he declined to elaborate.

Diocese attorney Rand Wonio said the victims have proposed a dollar amount for settlement claims, but he said both sides have agreed not to disclose the figure.

"It's a tragedy for the victims, the families and the diocese and all of its people," Wonio said of the abuse allegations.

The lawsuits also allege church hierarchy knew about some instances of abuse but covered up cases, failed to discipline priests and simply moved them among the 95 parishes scattered around 22 counties in Eastern Iowa.

Preliminary talks aimed at settling the claims out of court began last month. The first of several trials is set to begin in November.

Franklin also urged leaders at individual parishes to review business records of each parish, which he said were set up as individual corporations decades ago and shielded from bankruptcy litigation involving the diocese.

Phone messages left at several local parishes were not returned Friday.

The Rev. Lou Leonhardt of St. Joseph's Church in Hills said he will do what the Bishop ordered and pay close attention to the church's business records and "let the lawyers worry about the rest of it."

"I think it's disheartening that some of these people would ask for so much money that the diocese would be driven to that," Leonhardt said. "I think there should be fair compensation, but they shouldn't be driving people into bankruptcy."

The Rev. Walter Helms of St. Thomas More Church, 108 McClean St., declined to comment on the bankruptcy matter "until I talk to someone who knows more about it."

Helms said the possibility of bankruptcy is a daunting task for the church.

"I imagine it would be for anyone," he said.

The Associated Press contributed to this report.

Reach Mike McWilliams at 339-7360 or mmcwilliams@press-citizen.com.