Catholic Diocese of Stockton to declare bankruptcy

Bishop Stephen Blair of the Stockton Diocese answers questions about its Chapter 11 bankruptcy on Monday, Jan. 13, 2014. The filing is not expected to affect St. Anne’s Church in Lodi.

The Diocese of Stockton intends to file for Chapter 11 bankruptcy protection Wednesday in Sacramento Federal Court, after more than six months of discussing the possibility with its members.

Bishop Stephen Blaire said Monday that the diocese’s financial difficulties can only be resolved by filing for bankruptcy protection.

“This is a good, helpful process when you’re in the situation we are in,” Blaire said.

The decision comes after the diocese realized it could no longer afford to settle with the sexual abuse victims that have come forward to accuse the organization of misconduct, Blaire said.

He said the Stockton diocese has paid more than $14 million in legal settlements and judgments to more than 30 victims over the last 20 years.

Blaire said total payments, including those from insurers and other payors, are more than $32 million.

In addition, there are currently two pending lawsuits against the diocese and another two cases that have yet to be filed as lawsuits, according to Blaire.

He said the diocese has paid a minimum of $1.5 million when cases against it are settled.

“If we were to try to settle these cases, we might be able to drum up enough money for one victim,” Blaire said. “But then what about the other victim? We’re trying to be as fair as we possibly can to all the victims involved.”

Blaire said the bankruptcy protection will not affect St. Anne’s Catholic Church in Lodi.

He said parishes like St. Anne’s are organized as separate corporations and are not filing bankruptcy along with the diocese.

“The only entity filing bankruptcy is the Roman Catholic Bishop of Stockton,” he said. “That is the legal name of the corporation filing for bankruptcy.”

Blaire added the diocese and its parishes have been separate corporations for at least 11 years.

Each parish does have its own attorney, and Blaire has advised each parish to prepare for challenges to the filing.

Challenges may include another party claiming parishes like St. Anne’s should be contributing to the settlement payouts, he said.

Joelle Casteix, western regional director of Survivors Network of those Abused by Priests, said the diocese’s intent to file bankruptcy is a “self-serving dodge.” She said the filing is a way to hide the truth of abuse and cover-ups from the public.

She said bishops dealing with priests who are sexual predators have many options, but Chapter 11 bankruptcy should not be one.

“The bishop had no problem fighting Travis Trotter when he accused Michael Kelly of abuse,” Casteix said. “And now he’s talking about compassion and fairness to these victims.”

Trotter was an altar boy at the Cathedral of Annunciation in Stockton more than 20 years ago, and claimed Father Michael Kelly had abused him as a boy. He was awarded $3.75 million in 2012 after a 4.5-year legal battle with the diocese.

Casteix said she hopes anyone who saw, suspected or suffered sex crimes committed by the clergy to come forward.

“I also hope (Blaire) is honest, transparent and as forthright as possible through this process,” she said.

Along with fairly paying sexual abuse victims, the bankruptcy filing will help the diocese continue to provide support to its ministries and communities, Blaire said.

He said the entire bankruptcy process could take as long as two years.

At the end of the two years, Blaire said, the diocese will be cleared of all debt from the past, and all victims should be compensated.

“I think this is the right decision,” Blaire said. “I think we want to engage in a process that will bring everyone a resolution. We want to find a way for any and all victims who haven’t come forward, to come forward and have their day in court.”

Contact reporter Wes Bowers at wesb@lodinews.com.

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