Church officials plan abuse claim payments

Associated Press/November 10, 2004

Tucson -- The Roman Catholic Diocese of Tucson will attempt to sell some properties, try to get significant help from its insurers and encourage parish contributions to settle sex abuse claims, diocesan officials told bankruptcy creditors Tuesday.

Bishop Gerald Kicanas, accountant Chris Linscott and bankruptcy lawyer Susan Boswell were among a half-dozen people who fielded questions for the diocese for more than 21Ú2 hours from lawyers for present and potential creditors -- who include abuse victims seeking damages -- in its bankruptcy case.

The diocese filed for Chapter 11 bankruptcy protection Sept. 20, becoming the second in the nation to do so. The Archdiocese of Portland (Ore.) filed in July.

The Tucson diocese settled 11 lawsuits in 2002, but continuing litigation prompted Kicanas to decide to file for bankruptcy reorganization.

He said doing so was the only way to guarantee a mechanism to pay others who also were victims of sexually abusive priests or other clergy and still allow the diocese to continue operating.

Kicanas said the diocese has paid out an estimated $15 million in settlements, including 11 lawsuits settled in 2002. "We've had to beg and borrow from anyone who would help us," he said.

The diocese's insurers probably paid from 10 to 20 percent of the settlements, and the diocese will be pushing to get more to help meet the claims against it, Kicanas said.

The insurance companies have not agreed to additional payments yet, the bishop said.

"What we expect is they will substantially help us to meet the claims against the diocese," he added.

John Shaheen, property manager for the Tucson diocese, said the diocese is committed to selling properties it holds to help raise money toward a pool through which victims of clergy sexual abuse will be paid.

Shaheen said a number of properties the diocese holds are "generally in rural areas that are inaccessible" and donated by parishioners likely because the owners couldn't sell them.

He mentioned three parcels in Cochise and Santa Cruz counties.

Diocesan spokesman Fred Allison said three 10-acre parcels of land in the Tucson area will be sold "for maximum return" to help raise settlement funds.

There also were questions about previous property transfers or transactions, including land where the Regina Cleri Seminary once operated.

The diocese sold that property to be used to build St. Augustine Catholic High School, with the proceeds from that $3 million sale to go toward paying the 2002 settlement, Kicanas said.

In an ideal situation, the diocese would have sold the land to the school for $1, but the sex abuse scandal forced it to sell it for maximum fair value of the property, he said.

Linscott said that the diocese administers services for probably 50 to 70 other Catholic organizations, pooling assets to achieve a greater return on investments.

Linscott said some of $13 million in personal property listed among church assets in its bankruptcy filing "could be available for settlement."

But Boswell quickly cautioned that administrative costs will have to be paid out of that, and that the list also includes endowments and other restricted funds.

The diocese contends that the parishes are separate financial entities, and they are not listed among diocesan assets.

But the bishop said he hopes that "perhaps our parishes would consider contributing toward a settlement."

Boswell said it might be possible to shield parishes contributing money to settle claims from being named in any subsequent lawsuits.