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Diocese mulls bankruptcy after sexual abuse settlements
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The Bulletin

News about the most recent sex-abuse settlement involving the Catholic Diocese of Stockton raised widespread speculation on whether the church will seek bankruptcy protection.

Bishop Stephen E. Blaire addressed these speculations in his open letter to all the faithful in the diocese which was read during all the Masses over the weekend.

“At this point, no decision has been made about how we will go forward and how we will meet our obligations,” he stated in his pastoral letter.

The bishop added that “it is too early to tell” exactly what type of protection the diocese will seek in court. However, he emphasized that any decision made will “not impact the solvency or operations of the parishes.”

Sister Terry Davis, on Monday, said that “parishes should not be affected because they are separately incorporated from the diocese so they are not the subjects of these lawsuits.”

She also clarified that discussions on what type of bankruptcy protection the diocese will seek in court are still “at the beginning” stage and that there has been no firm decisions made on this issue.

Bishop Blaire’s open letter came close on the heels of the most recent sex abuse settlement that was made in connection to the lawsuits filed against defrocked Catholic priest Oliver O’Grady. Under the agreement, the unnamed victim will receive $1.75 million with the diocese paying $875,000 and the remaining portion to be paid through insurance proceeds. With the settlement done, the case will be dismissed.

In his candid letter to the faithful, the bishop said that this latest settlement brought the total amount that the diocese has paid in the past 20 years to more than $15 million dollars, with the money going to judgments, settlements and legal costs, and that $6 million of that has been paid in the last six years alone.

The latest sex abuse settlement does not close the door to the diocese’s legal responsibilities, prompting the bishop to give advance notice to diocesan Catholics as to what is expected in the future.

“Today, the cash reserves from which these payments are made are all but gone,” he reported. “The money that remains for handling these cases is a small fraction of what is needed to face pending lawsuits as well as any new claims. This is a very serious situation.”

Blaire assured all parishioners in the diocese that when it came to making a decision on the bankruptcy protection to be sought, all “options available to us” will be carefully examined, and that any decision arrived “will be made only after wide consultation with the many parties involved.”

In the last 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.”

Addressing the latest settlement made last week, Blaire said that he hoped this will help the victim “continue to heal.”

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

The bishop concluded his letter by assuring the faithful in the diocese that they will be kept informed of future decisions and actions on a regular basis.

“Our Diocese is a community of believers. We are a family of people and parishes. In times of difficulty, such as those we face now, families come together and talk things through. This is what I intend to do in the weeks and months ahead,” he stated.

If the diocese decides to file for Chapter 11 bankruptcy protection, it would not be the first to do so in the United States. According to, eight Catholic dioceses in the United States have filed for bankruptcy protection during the ongoing sexual abuse crisis in the Catholic Church – in Portland, Ore.; San Diego, Calif.; Tucson, Ariz.; Davenport, Iowa; Spokane, WA; Fairbanks, Alaska; Wilmington, DE; and, Milwaukee, WI.