Diocese of Fairbanks to file for bankruptcy

Fairbanks, Alaska, Feb 15, 2008 / 00:33 am

The bishop of Fairbanks announced on Wednesday that the failure of negotiations to settle dozens of sexual abuse claims means the Diocese of Fairbanks will have to file for bankruptcy, the Anchorage Daily News reports.

The negotiations allegedly failed because one of the diocese’s insurance carriers did not “participate meaningfully.”

More than 140 people have filed claims against the diocese alleging sexual misconduct by priests or church volunteers in incidents from the 1950s to the early 1980s.  Though a handful of claims have been settled, most are still pending.

Other claims involving the same priests and volunteers were filed against the Oregon Province of the Society of Jesus, but were settled in a $50 million settlement reached in November.

The Diocese of Fairbanks intends to file for Chapter 11 bankruptcy, which will open the financial records of the diocese to scrutiny.  Robert Hannon, chancellor and special assistant to Bishop Donald Kettler, said bankruptcy would provide a way for church assets to be distributed fairly among abuse victims.

"We acknowledge that harm was done to people and this is, we think, the most pastoral way to address those hurts," Hannon said, according to the Anchorage Daily News.

According to the Associated Press, Bishop Kettler said in a prepared statement, "I am legally and morally bound to both fulfill our mission and to pursue healing for those injured."

"While filing for reorganization is not my first choice, I believe that at this time this is the best way to bring all parties together and to provide for fair and equitable treatment of all who have been harmed," he continued.

Ken Roosa, an Anchorage lawyer representing victims of clerical sexual abuse, said the bankruptcy filing was the only viable path to settling the lawsuits.  The diocese’s insurance company, he said, refused to pay enough and sometimes refused to pay anything at all.

"The reason they need this process is because their insurance companies are stiffing them," Roosa told the Anchorage Daily News. "I'm only surprised it took so long."

"We applaud the bishop's decision to move forward," he said.

Hannon said that settlement talks in December did not progress because one of the diocese’s insurance carriers, whom he identified as the Illinois-based CNA (not affiliated with Catholic News Agency in any way), failed to “participate meaningfully.”

According to Hannon, legal expenses were also consuming diocesan assets before compensation could be provided to victims.

Another factor was a recent judicial decision against the diocese in claims involving Joseph Lundowski.  Lundowski, a deceased lay missionary, was accused of abusing dozens of boys and young men between 1960 and 1975.

Hannon believed parishes should not be affected by the bankruptcy filing.  "You really can't close or consolidate parishes when you only have one every 200 or 300 miles," he said.

The Diocese of Fairbanks has an annual budget of $6 million.  The nation’s geographically largest diocese, it covers more than 400,000 square miles.  According to the diocese, only 8 of the 46 parishes are able to financially support themselves.