Davenport Diocese Files for Bankruptcy

By Thomas Geyer
Quad-City Times
October 11, 2006

http://www.qctimes.com/articles/2006/10/11/news/local/doc452c25cbc994c696535369.txt

[See also the bankruptcy documents below.]

The Catholic Diocese of Davenport filed for bankruptcy protection Tuesday afternoon, effectively putting 25 claims of sexual abuse by priests in the hands of a judge.

“I and the leadership of the diocese believe that, as difficult as this decision is, it provides the best opportunity for healing and for the just and fair compensation of those who have suffered sexual abuse by clergy in our diocese, those who have come forward and those who have not yet decided to come forward,” Bishop William Franklin said in a news release issued late Tuesday afternoon.

St. Vincent Center in Davenport. Times file photo.

Just before 5 p.m., diocese representatives also filed papers seeking protection from creditors under Chapter 11 of U.S. Bankruptcy Code. The documents were filed in the U.S. Bankruptcy Court of the Southern District of Iowa. Franklin said a reorganization plan also will be filed for consideration by creditors and the court.

“I have searched for ways to adequately respond to the 25 outstanding claims of sexual abuse against Monsignor Thomas Feeney, William F. Wiebler and Monsignor Carl H. Meinberg and retired Bishop Lawrence D. Soens, all of which occurred 30 to 40 years ago,” Franklin said. “Because the settlement demands are greater than the available assets of the diocese, we cannot continue on our present path.”

Franklin said he made the decision after consulting with the Diocese of Davenport Corporate Board and Finance Council, the College of Consultors, diocesan directors and diocese attorneys.

Spokesman Deacon David Montgomery said the bankruptcy does not affect any of the parishes or schools within the diocese.

“Each is separately incorporated,” he said. “We won’t know about its effects on employees until a reorganization plan has been drawn up and approved by the creditors and court.”

But the diocese will need to cut about 30 percent of its operating budget.

“The annual diocesan appeal funds about 70 percent of the operations here,” Montgomery said, adding that each parish has a formula to pay a certain amount to the diocese as part of its annual appeal with the rest of the money staying in the parish.

The diocese has a total of $5.82 million in assets that are now in the hands of the bankruptcy court, he added. Its property includes the land on which the diocese headquarters is located, the building, the bishop’s residence and some property along Telegraph Road, Montgomery said.

There was some question whether St. Anthony’s Church in downtown Davenport is among the assets, but diocese attorney Rand Wonio said that was not the case.

“We discovered a few years ago that it was listed in the name of the diocese and we corrected that, but it has been separately incorporated for many years,” he added. “We think the claimants will try to claim it as diocesan property, but we’re confident it’s not and the courts will so find.”

Montgomery echoed Franklin’s statement that the diocese filed bankruptcy to be fair to all current and future claimants.

“We don’t have the money to pay the current judgments,” Montgomery said. “In order to be as fair as we can to all the victims, if they make a filing to the bankruptcy court, they will be treated more fairly.”

A few victims who filed early claims of clergy abuse could leave no assets for victims who make later claims, he added.

“This way, everybody who files is treated more fairly.”

Wonio said the 25 claimants will be identified to the bankruptcy court and instructed to file their claims with the bankruptcy court. The potential claimants also will receive a notice from the bankruptcy court and will need to file by a certain date.

“The model that everyone seems to be using is Tucson,” he said of the southern Arizona diocese. “They’ve successfully gone through bankruptcy and they’re back in business.”

Wonio said Tucson had a separate fund set up as part of the bankruptcy for people who may remember instances of abuse and file claims in the future.

“This was the only viable alternative,” he said. “At the end of this, the diocese will be able to go forward with its true mission.”

But Davenport attorney Craig Levien, who represents the 25 claimants, said that by going into bankruptcy, the diocese is trying to avoid responsibility for future claims.

It also puts on hold a trial that was scheduled to begin Oct. 23 in Scott County District Court against the diocese and former Sioux City Bishop Lawrence Soens. The case was filed by Michael Gould, who now lives in Florida.

“We believe it’s a sad day for the victims of the clergy abuse, the members of the church and for the diocese,” Levien said. “We believe it was an unnecessary step.”

The claimants tried to mediate within the resources of the diocese, he said, but the diocese wanted to go to trial. In the case of Michl Uhde, he said, that plan backfired.

A Scott County jury awarded Uhde, of Davenport, a little more than $1.5 million on Sept. 18.

“They thought they could go into court and win or greatly hold down any compensation awarded,” Levien said. “The jury spoke pretty loudly and clearly.

“The diocese underestimated the horror and the responsibility for what the priests did and what the bishops covered up. It’s a two-pronged evil.”

Bankruptcy also could mean that the diocese might be able to keep certain things about the abuse from getting out, he added.

Levien said he will help the claimants hire a bankruptcy attorney.

“Bankruptcy was not our choice,” he said. “They (the diocese) think it made sense, and we respectfully disagree with them.”

Ann Green, a member of Iowa SNAP — the Survivors Network of those Abused by Priests — said the decision is disappointing, and she is worried that the bankruptcy will give victims who have not yet come forward a limited amount of time to make their claims.

“It’s sad to know the victims are going to have to come forward on Bishop Franklin’s time,” she said. “A number of victims won’t be able to come forward and find healing.”

Earlier Tuesday, SNAP sent Franklin a letter asking the diocese to release financial records and meet with parishioners before deciding whether to file bankruptcy. Green said a similar request was made two years ago without a response from the diocese.

Montgomery said the diocese has already disclosed its financial records on its Web site and in the Catholic Messenger, the diocesan newspaper, and has been holding meetings around eastern Iowa for the past two years concerning the bankruptcy issue.

Also Tuesday, District Judge Charles Pelton issued a ruling in the Gould case that removed Regina High School in Iowa City as a defendant. Soens was principal at the school at the time of the alleged abuse in the 1960s. Gould filed his suit in 2005.

Pelton found that the Iowa Legislature created a policy shielding schools from such claims that are more than five years old. He said the policy is not provided to other entities.

Levien said he discussed the ruling with Gould and was planning to file an appeal. His client was on vacation Tuesday, Levien said, and Gould could not be reached for comment.

For the Rev. David Hitch, pastor of St. Mary’s Parish in Tipton, Iowa, the bankruptcy is just another horrible episode in a long, sad saga.

“Right now, it’s just kind of stunning to me,” he said.

Hitch said he was in seminary, studying to be a priest, about the same time his younger brother was being abused by former priest James Janssen. His brother told him about the abuse in 2002.

Consequently, Hitch has stood by people who have been abused by priests and have filed claims against the diocese.

While he acknowledged that Franklin is a good man, Hitch said the bishop and the upper echelons of the diocese paid too much attention to the attorneys and not enough to their hearts.

“This could have all been different even five years ago if Bishop Franklin had not listened to the lawyers and reacted like any bishop should have reacted, with compassion and caring,” Hitch said. “The bankruptcy never would have happened if Bishop Franklin and the leadership staff would have responded with compassion and caring instead of stonewalling them.”

As a priest, Hitch said he has tried to understand what happened to his brother and the other victims of abuse he has met.

“For me, it’s personal,” he said, adding that he stands with each victim.

“As a priest, and as someone called to be a priest for the people, it’s clear-cut for me,” he said. “You can turn your back or you can stand for something, and that’s what the Gospel calls me to do, and I wish it would call the whole church, too.

“The world knows, and our diocese must know, that it was not the fault of those who were abused. The fault was the position taken by the leadership of the diocese.”

There should be a complete and independent investigation of the diocese in terms of who knew what and when, and it should be made public, “so we really get to the bottom of this cover-up that went on,” Hitch said.

(Times reporter Dustin Lemmon contributed to this article.)

Thomas Geyer can be contacted at (563) 383-2328 or tgeyer@qctimes.com.

SPECIAL:

Read the pr document by clicking here.

Read supplemental information by clicking here.

Read the bankruptcy document by clicking here [a 1.12 megabyte file].

[Note from BishopAccountability.org: We also present the Petition in smaller files that are easier to download.

• Voluntary Petition
• Schedule A. Real Property
• Schedule B. Personal Property
• Schedule C [not attached]
• Schedule D. Creditors Holding Secured Claims
• Schedule E. Creditors Holding Unsecured Priority Claims
• Schedule F. Creditors Holding Unsecured Nonpriority Claims
• Schedule G. Executory Contracts and Unexpired Leases
• Schedule H. Codebtors
• Declaration Concerning Debtor's Schedules
• Statement of Financial Affairs
• Disclosure of Compensation of Attorney for Debtor(s)
• List of Equity Security Holders
• Verification of Master Address List
• Corporate Ownership Statement ]