Wilmington Diocese files for bankruptcy

Nearly 12 hours before the first of several clergy sexual abuse cases hit the courtroom floor, the Catholic Diocese of Wilmington announces a controversial Chapter 11 bankruptcy filing.

 

Nearly 12 hours before the first of several clergy sexual abuse cases hit the courtroom floor, the Catholic Diocese of Wilmington announces a controversial Chapter 11 bankruptcy filing.

After attempting settlement negotiations on 13 sexual abuse cases Sunday night, the Diocese decided to file for bankruptcy protection. The filing automatically freezes any pending lawsuits against the Diocese, including the sexual abuse case against former Wilmington Diocese priest, Francis DeLuca, scheduled for trial on Monday morning.

 

Bishop W. Francis Malooly says the decision was a painful one that he hoped he would never have to make. “We have a finite amount of resources,” Bishop Malooly said at a press conference on Monday, “So, it became clear in the numbers of the possible early settlements that we would never get through 142 claimants in any fair or equal way.”

The Diocese currently faces 131 sexual abuse cases against clergy from 142 litigants. “We have a moral responsibility in the state of Delaware,” Bishop Malooly says, “To compensate victims as best we can for the horrible damage done by those priests.” Malooly continued to say that this bankruptcy filing offers the advantage of a neutral party helping to make the decisions on how to fairly take care of their claimants and creditors.

Bankruptcy attorney, Bob Brady, was also on hand at Monday’s press conference explaining how the filing will give victims the opportunity to seek relief from the lawsuit freeze and have their case tried in civil court. “Our hope is that we offer them a more efficient and cost effective way as part of the bankruptcy” Brady said.

Wilmington Attorney Thomas Neuberger is the lead co-counsel for 88 of the claimants. In a press conference held at his Wilmington office on Monday, he expressed his outrage on what he called a “sham filing” to cover up the truth from the public. “It’s designed to maintain the secrecy surrounding its responsibility and complicity in the sexual abuse of hundreds of Catholic children,” Neuberger said.

Neuberger expressed speculation that the Diocese has hidden its assets for 13 months since Malooly entered office, resulting in what could be a potential fraudulent bankruptcy filing. He plans to “scrutinize every expenditure, every transfer, every bank account, every deed” in bankruptcy court.

The first of a series of trials was scheduled to begin at 10am Monday in Superior Court with Michael Vai, 57, against former Diocese priest Francis DeLuca. Other trials dates have been scheduled throughout 2010.

“This filing is part of an ongoing plan to try to respond to victims in a way that will bring about their healing,” Bishop Malooly says claiming this decision was a “moral obligation” on their part.

The Wilmington Diocese is the seventh Diocese to file for Chapter 11 bankruptcy, in an effort to resolve settlement issues with victims of child abuse by clergy.

A hearing is set for this case in bankruptcy court on Wednesday.