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Experts: Archdiocese Unlikely To File For Chapter 11

Dec 6, 2002 | USA Today

Even though a finance panel has given its OK, bankruptcy experts doubt that the Boston Archdiocese will seek bankruptcy protection from hundreds of lawsuits alleging child sexual abuse by priests.

While such a move would halt court action on 450 claims, Cardinal Bernard Law would have to surrender financial control of the archdiocese to the bankruptcy court, which would have the power to review all church records and order the sale of church property.

''The cardinal is not going to be happy about sitting in bankruptcy court and answering questions about how he handled money,'' says Fred Naffziger, professor of business law at Indiana University-South Bend. ''It's possible, but not probable they would file.''

The archdiocese's finance committee announced late Wednesday that it has given Law permission to seek bankruptcy-court protection. If Law proceeds, it would mark the first time a U.S. Roman Catholic diocese has filed for bankruptcy.

Law would need Vatican approval. A Vatican official declined to comment, except to say officials are following the situation ''with great attention.''

Dioceses in Dallas and Santa Fe claimed to be at the brink of bankruptcy in the 1990s but stopped short when they won concessions from plaintiffs suing over abuse. ''We didn't want to put them in bankruptcy,'' says Sylvia Demarest, one of the lead attorneys for the Dallas plaintiffs. ''We were the guys in the white hats, and we wanted to continue to be the guys in the white hats.''

The bankruptcy talk could be a tactic in the hardball negotiations between the church and lawyers who are pressing for multimillion-dollar settlements of abuse allegations. On Tuesday, plaintiffs' attorneys released 2,200 pages of documents that showed Law and others allowed abusive priests to remain in ministry long after their problems were known.

On Thursday, attorneys released memos about a priest who allegedly fathered at least two children in the 1960s and left an apartment where the mother had overdosed without calling authorities. The priest received therapy and was prohibited from contact with ''vulnerable women.'' He is now an associate pastor in a local parish.

The chief advantage for the archdiocese would be the quick resolution that bankruptcy proceedings offer. Harvard law professor Elizabeth Warren says the bankruptcy court would set a deadline for all claims against the archdiocese and reach a universal settlement with all parties in months. Civil court cases could drag on for years.

Mitchell Garabedian, an attorney who won a $10 million settlement from the archdiocese for 86 victims of former priest John Geoghan, doubts the church will file.

''They pulled this gun on me for five years, and they've never followed through with the threat,'' Garabedian says. ''They are trying to get leverage in the mediating process. I don't think a powerful religious entity such as the Archdiocese of Boston is interested in surrendering its authority.''

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