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Bishop tells faithful bankruptcy filing likely

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POSTED December 10, 2013 1:25 a.m.

Bishop Stephen E. Blaire of the six-county Catholic Diocese of Stockton announced over the weekend the diocese will likely file for bankruptcy saying there is “no viable option” other than re-organization.

That action may take place “after the first of the year.”

The announcement was made in a letter from the bishop that was distributed to all parishioners in the diocese during all Masses Sunday and during the anticipated Masses on Saturday.

Since his last letter to all the faithful a few months ago, the bishop stated that the diocese has looked into all possible and available alternatives to filing for bankruptcy.

“However, no viable option has emerged other than re-organizing financially under the protection of Bankruptcy Court. Moving in this direction will enable us to continue to meet our obligations to the victims of sexual abuse, to the poor and vulnerable, and to you our people,” the bishop stated in his letter.

A footnote in his letter clarified that the use of the term “the Diocese” refers to “The Roman Catholic Bishop of Stockton, a corporation sole.” That statement means the diocesan “parishes and organizations are not subjects of the possible bankruptcy filing,” he stated, but also added, “Still they need to be prepared in case they are challenged, as has happened in other dioceses.”

The letter encouraged pastors and directors of various Catholic organizations in the district within the diocese to “secure legal advice on possible claims that might be made by the creditors of the Diocese.”

In an interview with diocesan communications director Sister Terry Davis in June when the bishop initially informed the faithful about the possibility of seeking bankruptcy, she said that parishes should not be affected because they are separately incorporated from the diocese.

That earlier letter came after the most recent sex abuse settlement at that time was made in connection to the lawsuits filed against defrocked Catholic priest Oliver O’Grady. The unnamed victim, under terms of the agreement, was going to be awarded $1.75 million, with the Diocese paying $875,000 and the balance to be paid through insurance, after which the case will be dismissed.

The bishop’s June letter also included the information that latest settlement brought the total amount the diocese has paid in the past 20 years to more than $15 million that went to judgments, settlements and legal costs. Of that total, $6 million have been paid in the previous six years alone.

The step toward filing for bankruptcy is being made because, as the bishop also explained in the summer, the cash reserves from which the above settlements were made “are all but gone.”

In the 14 years since his installation as bishop of the Diocese of Stockton, Blaire said he has “tried to settle these cases when possible and to heal the deep wounds caused to our church and our diocese by the evil of sexual abuse. I hope that we will be seen to have treated victims fairly.”

He added that “all victims of sexual abuse must be in our prayers always.”

As the diocese continues to look into a bankruptcy solution, the bishop assured that “our local church continues its important works: educating our children, celebrating the sacraments, feeding the hungry, visiting the sick and all the other ministries done in the name of Jesus Christ.”

In the midst of the above trials buffeting the Catholic Diocese of Stockton, one report states that the diocese has shown a significant population increase in all the six counties it covers – Alpine, Calaveras, Mono, San Joaquin , Stanislaus, and Tuolumne – with the exception of Alpine County.

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