Tucson, USA - The Roman Catholic Diocese of Tucson was the second in the nation to file for Chapter 11 bankruptcy because of sex abuse claims against priests, and now it looks to be the first one to emerge.
But whether it now will serve as a model for similar negotiations in other dioceses, as Bishop Gerald Kicanas hopes, is an open question.
At least in the short term, it seems unlikely to have much impact on two more acrimonious diocesan bankruptcies playing out in Portland, Ore., and Spokane, Wash., according to bankruptcy experts and other specialists who have followed the sex abuse scandals plaguing the Catholic church. And the leader of a major victim's advocacy group expressed disappointment with the settlement.
Still, Sam Gerdano, executive director of the American Bankruptcy Institute in Alexandria, Va., said the Tucson case shows what's possible if all sides are determined to reach a deal.
"Everybody had an eye on the ball, which is important," he said. "The eye has not been on the ball in the other cases."
In Tucson, Gerdano said, the diocese proactively put some money on the table and "indicated a willingness to get to a plan" as part of a negotiating process typical in Chapter 11 reorganization cases.
That plan, in the end, skirted questions about whether parishes and other properties tied to the church could be used to settle diocesan debts _ a controversy that has plagued the other cases.
Instead, a compromise was reached, with Tucson parishes agreeing to contribute $2 million toward the diocese's $22.2 million settlement in exchange for not being subject to claimants suing them individually. Doing so led the diocese's insurers, which had initially balked at contributing to the settlement pool, to agree to pony up $14.8 million.
Judge James Marlar last week gave his approval to a settlement and reorganization plan with the diocese contributing an additional $5.58 million to the total amount. Once the order is entered, creditors should start receiving payments in about 60 days, and the diocese _ serving about 350,000 Catholics in nine central and southern Arizona counties _ will be discharged from Chapter 11 bankruptcy.
Payouts to victims will go as high as $600,000 initially, with possibly more later.
"I think the healing can now start," said Thomas Groom, leader of a victims' committee that negotiated with the diocese. "It's been a long process ... it was tough. We went through a lot of tough times to come to a consensual plan."
Another member of the committee, Brian O'Connor, credited Kicanas with apologizing repeatedly to victims, both in public and private meetings. "I don't think there's much more that he could have done," O'Connor said.
Kicanas, sitting next to Groom at a news conference after the judge's approval, said that "I certainly feel that what happened here in Tucson is a model of how people can work together under contentious situations, adversarial situations, and come to a point where we could sit together as we are this afternoon at the same table, all feeling that justice has been served about as best as it can."
Whether that's possible in other dioceses remains to be seen.
Barbara Blaine, founder of the Survivors' Network of Those Abused by Priests, was critical of the Tucson settlement.
"This sidestepping by going through bankruptcy has allowed the church to keep all the secrets hidden," rather than forcing the diocese to reveal everything about its abusive priests, she said.
She also said there's a public danger "because there could be perpetrators still out there and posing a risk to children. So the bankruptcy basically lets the church off the hook."
Meanwhile, the ownership of parishes and other assets, such as cemeteries and charities, is at the core of the Portland and Spokane Chapter 11 cases. The bankruptcy judge in the Spokane proceeding is the first to have taken up the issue and has said she'll rule this summer _ with subsequent appeals certain.
"I'm frankly amazed that this issue didn't come up" in Tucson's case, said Chuck Zech, an economics professor at Villanova University who specializes in Catholic church finances. "It's still hanging out there for Portland and Spokane. It's going to have to be resolved eventually."
Zech noted that the Catholic diocese in Newfoundland, Canada, put all its churches, parish houses and missions up for sale to pay $13 million to a molester priest's victims.
Another bankruptcy specialist, Boston attorney Dan Glosband, who represented that city's archdiocese when it considered seeking bankruptcy protection, said the message to take from the Tucson case is "if plaintiffs want to see any money any time soon they should consider some sort of settlement structure. It might also be a good lesson for the debtors in the various dioceses."
The Tucson plan protected parishes and insurance companies. "That in itself is a great model," he said.
Marlar set a deadline for claims and moved the case along, "rather than turn it into a feast for lawyers," Gerdano said, and the lawyers and parties "did not view this as a full-employment project for life. They had a very realistic approach for working this case out."