WASHINGTON
Roman Catholic Diocese of Spokane
May 27, 2012
Pentecost, 2012
Dear Parishioners:
In October, 2010, I informed you that the Diocese of Spokane had entered a period of mediation to address demands resulting from claims of sexual abuse by clergy in past years, but which were made after the 2007 bankruptcy settlement’s Plan of Reorganization. That Plan, in addition to establishing a multi-million fund to compensate victim survivors, also provided for the possibility of claims to be made after the bar date of March 2007, for a period of nine years, or until 2016. At that time, one million dollars were set aside to cover these “future claims.” Twenty-two parishes in Spokane County stepped forward on behalf of all the parishes in the Diocese to offer their parish properties as collateral to assure that awards exceeding this one million dollar amount would be paid. Parishioners were advised that the risk of foreclosure was small, given that the number of future claims in all likelihood would not be significant.
As I noted in my letter to you shortly after I arrived in the fall of 2010, the Trustee, appointed to oversee the bankruptcy plan, informed me that the one million dollar fund would soon be exhausted with the payment of several future claims awards and that we would need to recapitalize the future claims fund immediately or face foreclosure on parish and school properties to satisfy this obligation. The Diocese did not have the funds available, which meant foreclosure action was imminent. The situation was deteriorating even more so at this time, since the high costs of legal efforts beginning in 2009 to challenge some of the future claims awards were draining what little resources we needed to operate and, as reported by the media, these challenges had reached a stalemate. We also were informed that more future claims would in all likelihood be accepted, thus placing the very survivability of the Catholic Church in Eastern Washington as we know it into serious question.
Taking all of this into consideration, I sought the assistance of a new team of competent individuals to take a fresh look at things and to put together a strategy to mediate this impasse and bring some order to the series of events that were cascading out of control. With their advice, I engaged the services of Federal Judge Michael Hogan of the U.S. District Court for the District of Oregon to serve as mediator. Once we secured the agreement of all parties, the bankruptcy court approved the mediation arrangement, which included the suspension of all appeals and court actions.
We identified four goals which we needed to achieve, if the mediation were to be successful.
1. Remove the immediate threat of foreclosure on parishes. I was convinced that the seizure of parish properties was not only a matter of losing facilities and material assets, but it also involved the displacement of faith communities and the diminishment of our Catholic school system. Thus, everything should be done to avoid that scenario;
2. Reduce our legal fees, which were averaging nearly a quarter of a million dollars annually in the three years following the bankruptcy settlement;
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