Church goes broke

News24.com/July 7, 2004

Los Angeles -- The US Catholic diocese of Portland announced on Tuesday that it would become the first in the country to file for bankruptcy as it buckles under the weight of multi-million-dollar sex abuse lawsuits.

The archbishop of the main city of the northwestern state of Oregon, Reverend John Vlazny, took the step as two major cases against the church stemming from alleged sexual abuse by its priests were set to go to trial.

"This is not an effort to avoid responsibility," said the archbishop in a statement. "It is in fact the only way I can assure that other claimants can be offered fair compensation."

In one of the cases that had been due to go to trial on Tuesday, plaintiffs were demanding more than $130m in damages, while another case sought $25m from the Portland branch of the Catholic church.

"We have made every effort to settle these claims fairly but the demand of each of these plaintiffs remains in the millions. I am committed to just compensation," Vlazny said.

But he added: "These demands go beyond compensation. With 60 other claims pending, I cannot in justice and prudence pay the demands of these two plaintiffs."

The archbishop said his diocese had already settled more than 100 claims against it over the past four years, paying $21m out of its own funds in the last year alone.

"We have worked diligently to settle claims of clergy misconduct," he wrote. "Major insurers have abandoned us and are not paying what they should on the claims."

The 60 or so pending cases will now go under the control of a bankruptcy court.

The archdiocese is the first of 195 in the United States to file for so-called Chapter 11 bankruptcy protection as the US Catholic church reels under the impact of the exposure of widespread sex abuse against children.

Church officials in Boston and the New Mexico city of Santa Fe have said they were considering seeking bankruptcy as they are swamped with lawsuits from alleged sex abuse victims.