Judge approves dioscese bankruptcy disclosure

April 03, 2008 10:17 am

— DAVENPORT, Iowa (AP) — A federal bankruptcy judge approved a disclosure statement Wednesday explaining how the Davenport Diocese plans to emerge from the bankruptcy protection it sought after a decades-long clergy sexual abuse scandal.
The ruling by Judge Lee Jackwig has attorneys optimistic that a $37 million settlement between the diocese and abuse victims will also be approved.
“If the plan was patently unapprovable, she would not have approved the disclosure statement,” said Hamid Rafatjoo, the Los Angeles-based attorney for the committee representing abuse victims in the case.
The disclosure statement will be mailed to the 162 victims for a vote. They will also review and vote on the diocese’s reorganization plan, which outlines terms of the settlement and the diocese’s efforts to prevent future abuse. Victims will have until April 23 to vote on the plan before Jackwig considers approval.
Mike Udhe, co-chairman of the committee representing victims, said he was encouraged with Jackwig’s decision to move forward. “The faster we can get this approved and behind us, the better it will be for the 162 people involved,” he said.
Last month Jackwig refused to approve the disclosure statement, saying she was concerned about whether bankruptcy law allows the diocese’s 83 parishes — which are incorporated separately — to be included in the settlement.
Attorneys then submitted a revised statement for the plan, which releases all diocese schools and parishes from liability for abuse that happened before the bankruptcy filing.
Diocese attorney Richard Davidson said the insurance company would not settle unless the parishes were included for fear that victims could also sue those individual entities.
Still, Jackwig questioned parts of the plan, including why only four of the diocese’s 83 parishes were contributing to the settlement. These churches — St. Mary’s of Iowa City, Sacred Heart Cathedral and St. Anthony’s of Davenport and Our Lady of Lourdes in Bettendorf — will contribute a combined $2.65 million.
“We only have four Catholic entities expected to put money into the pot. Why not everybody?” Jackwig asked Davidson.
Davidson said these churches had the most significant assets and the largest number of claims of clergy abuse.
Jackwig still must OK the plan for it to take effect. A hearing is set for April 30.
The diocese filed for bankruptcy in October 2006, saying it did not have the money to settle the claims stemming from its clergy sexual abuse scandal. The diocese and creditors reached a settlement in November that calls for the diocese to pay $17.5 million, with the rest coming from its insurance carrier, Travelers Cos. of St. Paul., Minn.