Archdiocese, Victims Fail to Reach Bankruptcy Settlement

By Annysa Johnson
Milwaukee Journal Sentinel
October 15, 2012

http://www.jsonline.com/blogs/news/174219421.html

The Catholic Archdiocese of Milwaukee, which faces more than a dozen civil fraud lawsuits over its handling of clergy sex abuse cases, filed for Chapter 11 bankruptcy protection in January. As the case proceeds, we'll have updates, analysis, documents and more.

The court-ordered mediation between the Archdiocese of Milwaukee and victims of sexual abuse has failed, sending the parties back to the U.S. Bankruptcy Court to resume what one court official has called a scorched earth legal battle.

The church and victims — at 575 members, they represent the largest class of creditors in the bankruptcy — have been in court-ordered mediation since July 20.

Victims attorney Jeffrey Anderson confirmed Monday that the mediation had failed but declined to elaborate on the sticking points, citing the confidentiality of the proceedings.

He said victims would now move forward to force the disclosure of thousands of pages of documents now under court seal, and to scrutinize the transfer of millions of dollars off the church’s books into trusts in the years before the bankruptcy.

The lack of a resolution “puts us back to where we were, ready to move forward with all the issues and battles that need to be fought."

The attorney and a spokesman for the archdiocese did not immediately return telephone calls for comment. Anderson said he expected the archdiocese to resume its efforts to throw out claims that are beyond the statute of limitations, or involve religious order offenders, or victims who received prior settlements. If it is successful, it would eliminate the vast majority of claims, according to victims.

The advocacy group Survivors Network of Those Abused by Priests issued a statement saying, “the Archdiocese of Milwaukee has once again raised false hopes of a settlement with victim/survivors and a resolution to the clergy sex abuse and cover up crisis.”

The archdiocese filed for Chapter 11 bankruptcy protection in January 2011, saying it was the only way to equitably compensate victims and still continue the church’s ministry. U.S. Bankruptcy Judge Susan V. Kelley ordered both sides into mediation in July, saying the costs of the bankruptcy were astronomical.

The archdiocese had spent about $7.2 million as of Aug. 1 for attorneys and consultants on both sides, and more than $300,000 in fees has been added since then, according to court records. In bankruptcy, the debtor pays all costs.