January 02, 2005

Diocese lawyers will get paid first

Arizona Daily Star

By Stephanie Innes

The first people to be paid under the Roman Catholic Diocese of Tucson's Chapter 11 reorganization plan are the diocese's lawyers, while plaintiffs with valid claims of sexual abuse by priests will be grouped together with "unsecured creditors" - the last to be paid.

Priority payment to lawyers from the bankrupt entity - in this case the diocese - is not unique to the diocese's bankruptcy case, though it's one of the issues that could be raised in 2005 as the diocese seeks approval of creditors for its 71-page bankruptcy reorganization plan. The lead bankruptcy attorney for the diocese last week said she is hopeful the case will be resolved sometime this year and that plaintiffs with valid claims against the diocese will be paid as quickly as possible, though she could not put a time frame on when.

According to financial records submitted to the Bankruptcy Court, the diocese so far has spent at least $255,000 in legal and other fees associated with the case, and lawyers representing the diocese's 75 parishes appear to have cost $213,000, though the diocese will not explain a payment that was made to the parish attorneys in the weeks leading up to the bankruptcy filing.

The expenditures of nearly a $500,000 for lawyers and other business fees associated with the bankruptcy less than four months into the case does not include the taxpayer costs of keeping the case in federal Bankruptcy Court.

Posted by kshaw at January 2, 2005 08:42 AM