Unsure Outcome for Churches filing for Bankruptcy protection
(October 17th, 2006 under Economic News )
The Diocese of Davenport, Iowa became the fourth parish to file for bankruptcy protection. These dioceses have been pushed into bankruptcy because of the multiple lawsuits filed by victims of alleged sexual abuse by parish priests. Each diocese has tried to bear the expense of mediating and settling the lawsuits but with the so many claims (25 claims for the Davenport Diocese) against them they are being forced into bankruptcy. It is a difficult process for each of the diocese and its parishioners. Dependent on how the court rules they can possibly see the "diocese assets being sold."
"Fred Naffziger, a professor of business law at Indiana University-South Bend, who has been observing the first three bankruptcies since the summer of 2004, said Tuesday that by pursuing bankruptcy, the Davenport might encounter the same difficulties its counterparts in Portland, Ore., and Spokane, Wash., have experienced.
"They are entering a can of worms they don't want to get into," he said.
Naffziger said the short-term appeal of bankruptcy of a diocese is that all civil cases against it must cease, and it prevents one creditor from getting unequal treatment over another. In the long term, such cases can become expensive as legal bills mount, however.
In Portland and Spokane, the cases are locked up in the courts. Naffziger said Portland already has spent more than $14 million on its bankruptcy. Spokane has a legal bill of $300,000 a month, and that does not include expenses from a court battle with its insurance company."
The full article will be available on the Web for a limited time:
http://www.qctimes.com/articles/2006/10/11/news/local/doc452c86a85047d000997296.txt
Pam
This entry was posted
on Tuesday, October 17th, 2006 at 1:52 pm and is filed under Economic News .