Oregon Archdiocese Files For Bankruptcy Protection

Source: http://www.nytimes.com/2004/07/07/us/oregon-archdiocese-files-for-bankruptcy-protection.html

The Archdiocese of Portland, Ore., filed for Chapter 11 bankruptcy protection on Tuesday, becoming the first Roman Catholic diocese in the nation to seek such relief in response to mounting claims by victims of sexually abusive priests.

The archdiocese announced its intention to file for bankruptcy just as jury selection was to begin in a civil trial. The archdiocese is being sued for negligence by a man who says it failed to remove a priest accused of having abused more than 50 boys from the 1950's to the 1980's.

The plaintiff was seeking $130 million in damages and said he was determined to have a public hearing of his case against the church. But a bankruptcy filing means that the trial is immediately suspended. The lawyer representing the plaintiff accused the Portland archdiocese of trying to prevent the full story of its culpability from coming to light.

Archbishop John G. Vlazny of Portland said in a statement to parishioners that bankruptcy was the ''best choice'' because ''circumstances beyond my control have created great financial risk.'' He said the bankruptcy filing would allow the church's parishes and schools to operate while financial issues were resolved.

''This is not an effort to avoid responsibility,'' Archbishop Vlazny said. ''It is, in fact, the only way I can assure that other claimants can be offered fair compensation.''

Archbishop Vlazny said there were more than 60 additional claims pending against the archdiocese. He added, ''Major insurers have abandoned us and are not paying what they should on claims.''

The archdiocese and its insurers have already paid more than $53 million to settle about 100 abuse claims since 1950 and last year alone paid more than $21 million in settlements, said Bud Bunce, director of communications for the archdiocese.

Several archdioceses faced with the prospect of large payments to victims of abuse have threatened to declare bankruptcy, but Portland is the first to do so. In June, the Diocese of Tucson said it was considering filing for bankruptcy protection.

Morris G. Shanker, a professor of law at Case Western Reserve University with expertise in bankruptcy law, said it was unusual for a religious institution to file for Chapter 11 protection but not unheard of. While it might seem strange for the archdiocese to have filed for bankruptcy before even going to trial, he said, there was a good reason for it.

adam on Wednesday 07 July 2004 - 23:05:30