Minnesota Archdiocese files for bankruptcy: best way to aid sex abuse victims

The Roman Catholic Archdiocese of St. Paul and Minneapolis filed for bankruptcy protection on Friday, saying it's the best way for the church to get as many resources as possible to victims of clergy sexual abuse while continuing its daily ministry.

"We're doing the right thing," Rev. Charles Lachowitzer, a top church official, told The Associated Press in an interview in advance of Friday's filing in U.S. Bankruptcy Court. "This decision reflects the end of a process of putting victims first."

The archdiocese is the 12th U.S. diocese to seek bankruptcy protection in the face of sex abuse claims. Church leaders have said for months that bankruptcy was an option, as the archdiocese faces numerous lawsuits by victims of clergy sex abuse. The lawsuits will be put on hold while the bankruptcy case is pending.

The filing estimates that the archdiocese — the largest in the state with more than 800,000 parishioners — has assets between $10 million and $50 million, with liabilities between $50 million and $100 million. It also estimated 200 to 300 creditors.

An attorney for the victims, Mike Finnegan, said the bankruptcy filing won't stop scrutiny of the archdiocese. But church officials have "promised to treat victims fairly during this process," said Finnegan, whose firm is working with the archdiocese as part of an October settlement on child protection issues.

But Patrick Noaker, another victims' attorney, said he's disappointed. Noaker is handling a lawsuit scheduled for trial this month, and he said the bankruptcy filing robs him of the chance to reveal information that could help protect children in the future.

"The process of bankruptcy is not going to make kids safer," he said. "I don't think it's any accident that they filed a week before this trial was going to start."

In a letter to parishioners, Archbishop John Nienstedt said he ordered the bankruptcy as the fairest way to distribute the archdiocese's finite resources to victims.

"This is not an attempt to silence victims or deny them justice in court," Nienstedt wrote.

Minnesota lawmakers created a three-year window in 2013 for victims of past sexual abuse to file claims that otherwise would have been barred by the statute of limitations.

Since then, the archdiocese has been sued roughly two dozen times, and it has received more than 100 notices of potential claims, according to Joe Kueppers, the archdiocese's chancellor for civil affairs.

The mission of the church and its day-to-day operations will continue through bankruptcy, archdiocese attorney Charlie Rogers said. Parishes and schools, which are incorporated separately from the archdiocese's central office, should not be affected.

"It's a smart move on their part," Pamela Foohey, an associate professor at Indiana University Maurer School of Law, said of dioceses' who file for bankruptcy. "It ultimately can be useful for the victims taken as a whole, assuming that the diocese treats them fairly."

Not all bankruptcy filings have gone smoothly. The Archdiocese of Milwaukee's bankruptcy has dragged on for four years as attorneys fight over who should get paid and how much.

But in Montana, the Roman Catholic Diocese of Helena sought protection only after working out a deal with victims. The deal was approved by a judge earlier this week.

The St. Paul-Minneapolis archdiocese does not have a pre-packaged plan for reorganization, but the archdiocese will try to avoid prolonged fights seen in other dioceses, Rogers said. The archdiocese has already addressed issues that have bogged down other bankruptcies, including implementing a new system to protect children and disclosing thousands of pages of church documents and the names of accused priests.

As a result, Rogers said, this bankruptcy could focus purely on financial restitution to victims.

Finnegan, the victims' attorney, said the process also will allow victims to look at the church's finances, and allow the archdiocese and victims to pursue insurance companies. Jeff Anderson, a victims' attorney working with Finnegan, said: "It is our belief that this action taken today is actually necessary."

Lachowitzer said he hopes parishioners see the bankruptcy filing as a necessary step to close "a horrendous and tragic chapter in the life of the church."

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