Portland Archdiocese declares bankruptcy
Aim is to keep parishes running in face of abuse settlements
Wednesday, July 7, 2004 Posted: 7:23 AM EDT (1123 GMT)
(CNN) -- The archdiocese of Portland, Oregon, filed for Chapter 11 bankruptcy protection Tuesday, just as the civil trials of two priests accused of sexual abuse were set to begin, Archbishop John Vlazny announced.
Vlazny said the filing was not an attempt to avoid responsibility for abuse allegations, but was "the only way I can assure that other claimants can be offered fair compensation," and to keep the archdiocese's schools and parishes operating.
No other American diocese has filed for bankruptcy, though Boston threatened to do so at the height of the abuse crisis that began there two years ago, according to The Associated Press. The Diocese of Tucson, Arizona, has said it will decide whether to seek court protection before an abuse trial there in September, according to the AP.
Chapter 11 protects an organization from being sued by its creditors while it restructures.
The archdiocese's filing automatically stays the trials unless a federal bankruptcy judge decides to let them proceed, according to Davis Slader, a lawyer for the plaintiff in one of two cases that had been set to begin Tuesday morning.
Slader said the archdiocese had "taken the cheap and easy way out, and ducked responsibility."
Although more than a hundred sex abuse claims have been settled -- costing the archdiocese an estimated $50 million -- dozens of cases remain.
Vlazny announced the action Tuesday morning by reading a letter to church members, which also included an apology to "those who have been harmed by abuse."
"At this point, circumstances beyond my control have created great financial risk," he said. "If I am to be a prudent steward of our resources, I believe that the best choice is to seek protection in bankruptcy. This step should allow the archdiocese and our parishes and schools to operate in normal fashion while difficult financial issues are resolved."
"We have worked diligently to settle claims of clergy misconduct," Vlazny said. "In the last four years, we have settled more than 100 such claims. Last year alone, the Archdiocese paid almost $21 million from its own funds. Major insurers have abandoned us and are not paying what they should on the claims."
Vlazny said the archdiocese "made every effort" to settle the two claims that were to go on trial Tuesday, but their demands -- which he said totaled $155 million -- went "beyond compensation" and might have prevented the archdiocese from dealing fairly with the 60 other claims pending.
The archbishop said he had no authority to take money from parishes or trust funds to fund settlements.
"This action offers the best possibility for the archdiocese: to resolve fairly all pending claims, to manage a difficult financial situation and to preserve the ability of the archdiocese to fulfill its mission. It will also allow us to continue our good works without fear of an impending large verdict," he said.
James Devereaux -- the plaintiff in one of the lawsuits that had been set for trial Tuesday -- spoke to reporters outside the Portland courthouse Tuesday morning. His case involves the Rev. Maurice Grammond, who was accused of molesting more than 50 boys and who died two years ago.
"For me, it was like having sex with God," said Devereaux -- now a middle-aged adult. "I knew I had committed the ultimate sin and I was doomed. Many years later, I learned that many parents had warned the archdiocese through the years that this priest was raping and molesting boys throughout Oregon. The archdiocese did nothing to protect those children or warn their parents."
"Today, the archdiocese filed bankruptcy, but they have been morally bankrupt my entire life," Devereaux said. "We will continue our fight to finally get the archdiocese to accept the sin of their crimes."
Asked about the archbishop's claim that the church did not have the money to settle the cases, Slader, Devereaux's lawyer, said, "The bishop has not begun to touch his pot. He is lying."
Aim is to keep parishes running in face of abuse settlements
Wednesday, July 7, 2004 Posted: 7:23 AM EDT (1123 GMT)
(CNN) -- The archdiocese of Portland, Oregon, filed for Chapter 11 bankruptcy protection Tuesday, just as the civil trials of two priests accused of sexual abuse were set to begin, Archbishop John Vlazny announced.
Vlazny said the filing was not an attempt to avoid responsibility for abuse allegations, but was "the only way I can assure that other claimants can be offered fair compensation," and to keep the archdiocese's schools and parishes operating.
No other American diocese has filed for bankruptcy, though Boston threatened to do so at the height of the abuse crisis that began there two years ago, according to The Associated Press. The Diocese of Tucson, Arizona, has said it will decide whether to seek court protection before an abuse trial there in September, according to the AP.
Chapter 11 protects an organization from being sued by its creditors while it restructures.
The archdiocese's filing automatically stays the trials unless a federal bankruptcy judge decides to let them proceed, according to Davis Slader, a lawyer for the plaintiff in one of two cases that had been set to begin Tuesday morning.
Slader said the archdiocese had "taken the cheap and easy way out, and ducked responsibility."
Although more than a hundred sex abuse claims have been settled -- costing the archdiocese an estimated $50 million -- dozens of cases remain.
Vlazny announced the action Tuesday morning by reading a letter to church members, which also included an apology to "those who have been harmed by abuse."
"At this point, circumstances beyond my control have created great financial risk," he said. "If I am to be a prudent steward of our resources, I believe that the best choice is to seek protection in bankruptcy. This step should allow the archdiocese and our parishes and schools to operate in normal fashion while difficult financial issues are resolved."
"We have worked diligently to settle claims of clergy misconduct," Vlazny said. "In the last four years, we have settled more than 100 such claims. Last year alone, the Archdiocese paid almost $21 million from its own funds. Major insurers have abandoned us and are not paying what they should on the claims."
Vlazny said the archdiocese "made every effort" to settle the two claims that were to go on trial Tuesday, but their demands -- which he said totaled $155 million -- went "beyond compensation" and might have prevented the archdiocese from dealing fairly with the 60 other claims pending.
The archbishop said he had no authority to take money from parishes or trust funds to fund settlements.
"This action offers the best possibility for the archdiocese: to resolve fairly all pending claims, to manage a difficult financial situation and to preserve the ability of the archdiocese to fulfill its mission. It will also allow us to continue our good works without fear of an impending large verdict," he said.
James Devereaux -- the plaintiff in one of the lawsuits that had been set for trial Tuesday -- spoke to reporters outside the Portland courthouse Tuesday morning. His case involves the Rev. Maurice Grammond, who was accused of molesting more than 50 boys and who died two years ago.
"For me, it was like having sex with God," said Devereaux -- now a middle-aged adult. "I knew I had committed the ultimate sin and I was doomed. Many years later, I learned that many parents had warned the archdiocese through the years that this priest was raping and molesting boys throughout Oregon. The archdiocese did nothing to protect those children or warn their parents."
"Today, the archdiocese filed bankruptcy, but they have been morally bankrupt my entire life," Devereaux said. "We will continue our fight to finally get the archdiocese to accept the sin of their crimes."
Asked about the archbishop's claim that the church did not have the money to settle the cases, Slader, Devereaux's lawyer, said, "The bishop has not begun to touch his pot. He is lying."
