Chapter 11 Bankruptcy Protection May Be The Only Option, Says The Diocese of San Diego In California, In The Wake Of Sexual Abuse Claims Potentially Costing Over $200 Million
The Roman Catholic Diocese of San Diego is considering filing for Chapter 11 bankruptcy, rather than going to trial regarding the 150 allegations by individuals claiming that they were sexually abused by diocese priests and church officials.
According to a letter by Bishop Robert Brom to parishioners, the bishop said that Chapter 11 could be the only option if the abuse victims could not be fairly compensated without "jeopardizing our overall mission…” he also expressed concern for the “betrayal of trust” experienced by the victims and begged for their forgiveness. He is expected to provide more extensive detail regarding his announcement later this week.
A lawyer for a number of the San Diego plaintiffs, however, says that the diocese has more than enough insurance and assets to settle the claims of clergy abuse. He also claims that the bankruptcy alternative would be one done in bad faith—not because the diocese is insolvent, but because the filing would automatically stay the upcoming trials.
The first case against the San Diego diocese that will go on trial—scheduled for the end of this month—was brought by a Colorado woman who is accusing Reverend Patrick O’Keeffe of persuading her to have sex with him at his parish office when she was just 17 in 1972. Three more trials involving multiple victims who claim that the priests who abused them were moved by diocese officials to different parishes in order to avoid the abuse incidents being exposed to the public are pending.
Although clergy abuse allegations against the San Diego diocese go back decades, the majority of the 150 lawsuits were filed in 2003 following California’s decision to lift, for one year, the statute of limitations for allowing clergy abuse cases to be filed. 30 other individuals who have filed claims against the San Diego diocese for sex abuse allegations have reached financial settlements. The San Diego diocese is comprised of one million Catholic members in Imperial County and San Diego.
If the Roman Catholic Diocese of San Diego were to file for bankruptcy protection, it would be the fifth of the 196 dioceses facing clergy sex abuse allegations to do so. Other dioceses that have filed for bankruptcy include the Roman Catholic Diocese of Tucson, the Archdiocese of Portland, the Roman Catholic Diocese of Davenport, and The Catholic Diocese of Spokane.
The Automatic Stay
When an organization or a business files for Chapter 11 bankruptcy, they immediately receive an automatic stay, which automatically suspends all collection activities, foreclosures, repossessions of property, and judgments for a set period of time. This stay gives the debtor an opportunity to try to resolve its financial situation without having to worry about paying its debts back. A few kinds of debts, such as family support payments, criminal proceedings, and support from property that is not part of one’s estate, are exempted from an automatic stay. In certain instances, a secured creditor can ask the court to grant it's debt relief from the automatic stay.
Sagaria Law, P.C. represents clients who wish to seek bankruptcy relief under the U.S. Bankruptcy code—Chapter 7, Chapter 11, and Chapter 13, in particular. With offices conveniently located in Monterey, San Jose, and Fremont, our bankruptcy attorneys represent clients throughout Monterey County, Alameda County, and Santa Clara County, as well as individuals and businesses in San Benito County, Scotts Valley, Capitola, Watsonville, and Santa Cruz. Contact Sagaria Law, P.C. today, and your initial consultation with us is free.
Diocese of San Diego Eyeing Bankgruptcy, Sign On San Diego, February 18, 2007
Related Web Resource:
Chapter 11: Bankruptcy Basics, US Courts.gov
US Code: Title 11 Bankruptcy, Cornell Law School
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