STOCKTON (CA)
Wall Street Journal
By STEPHANIE GLEASON
Jan. 14, 2014 T
The Catholic Diocese of Stockton, Calif., said it would file for Chapter 11 bankruptcy on Wednesday to address growing liabilities stemming from allegations of sexual abuse.
The diocese, known legally as the Roman Catholic Bishop of Stockton, explained its financial troubles saying, “Very simply, we are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse,” according to a news release issued Monday.
Over the past 20 years, the diocese has spent $14 million in legal settlements and judgments over these allegations. Despite having a balanced budget overall, it doesn’t have the funds available to settle currently pending lawsuits or allegations that could arise in the future, it said.
A Chapter 11 filing will allow the diocese to discharge liabilities stemming from sexual-abuse allegations and set up a trust for victims to receive compensation. The diocese said it hopes to arrive at a global resolution with victims and insurers through this process.
While in bankruptcy, the parties will likely agree on a figure that the diocese would contribute, in addition to potentially pulling in funds from insurers, but the diocese admits it holds “relatively little property and assets” overall.
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