Gallup Diocese Seeking to Sell Land to Pay Victims

By Tom Corrigan
Wall Street Journal
May 26, 2015

http://blogs.wsj.com/bankruptcy/2015/05/26/gallup-diocese-seeking-to-sell-land-to-pay-victims/

The Roman Catholic Diocese of Gallup, N.M., which stretches across 55,000 square miles of northern Arizona and New Mexico, is seeking to sell 55 parcels of mostly vacant desert land to help fund a settlement with about 60 alleged victims of clergy sexual abuse.

In court papers filed last week, the diocese asked U.S. Bankruptcy Court Judge David Thuma for permission to hire two real-estate brokers and to move forward with an auction process for the properties.

The auction will be held 50 to 60 days after the judge signs off on the request, according to court papers.

Lawyers representing the diocese, its insurers and alleged victims have spent nearly a year and a half assessing the value of the diocese’s assets and collecting evidence on the allegations of abuse and cover-up by diocesan officials.

The Diocese of Gallup, home to 58,000 parishioners, filed for chapter 11 bankruptcy protection in November 2013 as several lawsuits related to sexual-abuse claims were preparing to go to trial.

Of 14 Catholic dioceses and religious orders that have turned to chapter 11 to address waves of abuse-related litigation, one of the earliest was the Roman Catholic Diocese of Tucson, Ariz., in 2004. Like the Diocese of Gallup, the Diocese of Tucson also auctioned off property to pay legal bills and to help fund a settlement with alleged abuse victims.

Hank Amos, the chief executive of Tucson Realty & Trust Co., is one of the brokers hired by the Diocese of Gallup, based largely on his success selling the Diocese of Tucson’s property.

“It was home run for all involved,” he said of the Tucson auction. “It was more money than anyone thought we could achieve.”

Mr. Amos said church supporters, some of whom bought parcels of land to assist the diocese, helped him sell even the most difficult properties.

“They had no interest in those properties,” he said. “That was a big surprise to us.”

In Gallup, Mr. Amos’s firm and his partner, a California-based firm, will be paid $45,000 plus 10% of the gross sale price.

Judge Thuma has ordered the Diocese of Gallup, its insurance carriers and lawyers representing the alleged sexual-abuse victims to begin mediation no later than July 15.

Mediation, which will be overseen by a retired bankruptcy judge, provides an opportunity to resolve the diocese’s bankruptcy case consensually through a settlement that offers compensation to alleged victims and protects the diocese from future litigation.