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	Iowa Diocese 4th in U.S. to File for Bankruptcy over Catholic Clergy Sex-Abuse Suits By Barb Arland-Fye Catholic Online [Davenport IA] October 11, 2006 http://www.catholic.org/national/national_story.php?id=21584 Davenport, Iowa (CNS) – The Diocese of Davenport is now the fourth Catholic diocese in the United States to file for bankruptcy protection because of sex abuse lawsuits it faces. On Oct. 10, the diocese filed a petition for Chapter 11 reorganization in the Iowa District of U.S. Bankruptcy Court. The action came 22 days after a jury awarded $1.5 million to a Davenport man who claimed he was sexually abused by a diocesan priest nearly five decades ago. Demands for settlement of that lawsuit and 25 claims that exceeded $7 million prompted the diocese's decision to go to trial for the first time rather than settle out of court. The possibility of bankruptcy had been looming large in the diocese since October 2004, when it announced an agreement to settle 37 sexual abuse claims and lawsuits for $9 million. In the past two years the diocese has reached settlements totaling more than $10.5 million. The jury's award Sept. 18 left diocesan leaders with no other option, they said. "We cannot continue on our present path," Bishop William E. Franklin of Davenport said in a letter announcing the bankruptcy petition. The letter appears on the front page of the Oct. 12 issue of the diocesan newspaper, The Catholic Messenger. "To do so would mean that victims who have already made claims through their attorney would consume the remaining assets of the diocese, leaving no money left for other victims who have not yet made the decision to come forward," he said. "In justice, I want to reach out not only to those who have come forward, but also to those who will have the opportunity to do so." Chapter 11 of the U.S. Bankruptcy Code provides the best opportunity for the diocese to reorganize so that creditors are paid and the organization survives, diocesan officials said. Creditors would include victims of clergy sexual abuse. "We have to put a plan together about how we'll operate. It's the court's desire that we continue to exist," said Father Bob Gruss, the diocese's chancellor. "We have to prove to the bankruptcy court that we can continue to pay our bills and that we can provide services to our parishes and that money will continue to come into the diocese." Parishioners throughout the diocese are being urged to contribute generously to the Annual Diocesan Appeal now under way. The appeal usually funds 70 percent of the diocese's operation. Now, as a result of filing for bankruptcy protection, the diocese will depend entirely on those funds for its operation, Father Gruss said. The other three U.S. dioceses that have filed for bankruptcy protection include the Diocese of Tucson, Ariz., which emerged from bankruptcy one year ago, and the Archdiocese of Portland, Ore., and the Diocese of Spokane, Wash., which are going through the process now. The bankruptcy court will oversee all of the Davenport Diocese's assets, which will be used to pay outstanding bills and creditors. Those assets include the St. Vincent Center in Davenport, which houses diocesan administration and living quarters for some of the active and retired priests, as well as the bishop's house and a 10- to 12-acre piece of property, both in Davenport, said Char Maaske, the diocese's chief financial officer and vice chancellor. She estimated the diocese's net assets at $5.8 million. Priests won't be left homeless, however, and diocesan staff won't be left without work space. The diocese may be able to rent the St. Vincent property, but the judge would determine rent, she added. The filing will affect the Sept. 18 jury award and the Oct. 23 trial of retired Bishop Lawrence D. Soens of Sioux City on abuse allegations made against him for actions during his 33 years as a priest of the Davenport Diocese. All abuse claims will have to be settled in bankruptcy court. The diocese's assets will be distributed fairly among all claimants, Father Gruss said. The diocese will search for and contact all victims through local and national advertising to invite them to come forward to file a claim. Regular reports will be made to the public through The Catholic Messenger. Preventative measures for the protection of children and the education of adults also will continue, said Deacon David Montgomery, the diocesan communications director. "We live in faith and hope. We're at the cross and we're waiting for the Resurrection. ... The Lord will lead us through this," Father Gruss said.
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