Saturday, February 5, 2011

Diocese of Wilmington reaches bankruptcy settlement

The following is taken from the website of the Diocese of Wilmington:

Diocese of Wilmington reaches bankruptcy settlement

February 3, 2011 --- (Wilmington, DE) --- The Catholic Diocese of Wilmington, Inc. has reached a settlement of $77.4 million through mediation of its Chapter 11 bankruptcy, it was announced last night. The settlement agreement was reached between the Diocese and its insurance carriers, the Official Committee of Unsecured Creditors, clerical sex abuse claimants, and other claimants. This settlement ends all sexual abuse claims against the diocese and parishes pending in State court, and must be approved by the U.S. Bankruptcy Court for the State of Delaware.

“Since the beginning of the bankruptcy, our goals have been to fairly compensate all survivors of clergy sexual abuse, to honor our obligations to our creditors and lay employees to the best of our ability and to continue the charitable, educational and spiritual works of the Catholic community in Delaware and Maryland’s Eastern Shore,” the Most. Rev. W. Francis Malooly, Bishop of the Diocese of Wilmington said. “We feel that these goals have been reached by this settlement. While this settlement will have a great impact on the diocesan organization; it protects our parishes where the majority of our educational, charitable and spiritual ministry is done.”

According to the settlement, funds from the Catholic Diocese of Wilmington, Inc., and contributions from non-debtor Catholic entities including the Catholic Diocese Foundation, Catholic Cemeteries, Siena Hall, Seton Villa, Children’s Home, insurance carriers and the parishes themselves, will be placed in a trust to pay survivors of clergy sexual abuse and other creditors.

In addition to the monetary settlement, the Diocese has also agreed to a number of non-monetary terms of settlement including:

  • The Bishop will continue to meet with any sexual abuse survivor who wishes to meet with him. He will also send a letter of apology to survivors and their families.
  • The Diocese will provide to the Official Committee of Unsecured Creditors for public disclosure all non-privileged documents in its files related to sexual abuse by, and/or supervision of, abusive clergy, religious, or lay employees.
  • The Diocese will continue to review and enforce policies related to its For the Sake of God’s Children program that provides a safe environment in its schools and religious education program and screening of volunteers and employees.
  • The Diocese will continue its zero-tolerance policy regarding sexual abuse.
  • The Diocese will display a plaque in each of its institutions that states that sexual abuse of any kind will not be tolerated.
  • The Diocese will continue the current policy of terminating confidentiality agreements that survivors may have signed as part of past legal settlements.
  • The Diocese will continue to annually post on its web site the results of the annual audit by the United States Conference of Catholic Bishops of the Diocese’s compliance with the Charter for the Protection of Children and Young People


Other ramifications of the Diocese of Delaware Bankruptcy

As in seemingly all bankruptcy of Catholic Diocese, the diocese was considered a separate distinct corporate entity from the various parishes which the bishop reigns over.  See below from the U.S. Bankruptcy Court of Delaware Case, No. 09-13560 ,  Adv. Proc. No. 09-52866 [web posted is supplied at the bottom of  my posting]

In this Opinion, the Court draws a distinction between the Roman Catholic Diocese of Delaware (the “Diocese”) and the Debtor. The Diocese is not a legal entity, but, rather, an ecclesiastical entity under Canon law. It includes the Debtor, the Diocese’s parishes, and the other affiliated entities that carry out the Diocese’s ministry. With one exception, the Non-Debtor Defendants (defined below) are separate corporate entities that are part of the Diocese. The Diocese and its members (parishes, etc.) are under the ecclesiastical authority of the Bishop. Catholic Diocese Foundation is both a separate corporate entity and is independent of the Diocese.

Like so many dioceses in the United States the diocese had a investment  pool for the diocese and its parish.  The bankruptcy court in Delaware basically came to the conclusion that to a large degree this pool should be considered assets for purposes of bankruptcy and thereby subject to the claims of creditors.

Click on the following to see the exact decision of the Delaware court: :

Wilmington diocese agrees to $77 million abuse settlement | Reuters


The settlement is roughly $3 million higher than the diocese proposed in mid-January, when it said payouts would likely range from $75,000 to $3 million per victim, depending on the severity of the alleged abuse.

The Wilmington diocese filed for bankruptcy in 2009 due to mounting sex abuse claims dating as far back as the 1950s.

The Wilmington diocese said its offer was higher than the average claims paid by five other diocese in bankruptcy court settlements -- Fairbanks, Alaska; Davenport, Iowa; Spokane Washington; Tucson, Arizona; and Portland, Oregon.

Click on the following for the complete story:  Wilmington diocese agrees to $77 million abuse settlement | Reuters