Oregon archdiocese files for bankruptcy

The Archdiocese of Portland, Ore., yesterday became the first Catholic diocese in the country to seek bankruptcy protection because of multimillion-dollar awards given to victims of clergy sex abuse, halting two such court cases set to begin yesterday.

“The pot of gold is pretty much empty right now,” Archbishop John G. Vlazny said at a press conference.

The diocese filed the papers asking for Chapter 11 bankruptcy protection later in the day.

Archbishop Vlazny said the archdiocese and its insurers already have paid more than $53 million to settle more than 130 claims brought by people who said they were sexually abused by priests.

“Last year alone, the archdiocese paid almost $21 million from its own funds. Major insurers have abandoned us and are not paying what they should on the claims,” he said in a letter addressed to “brothers and sisters in Christ,” which appeared on the archdiocese’s Web site.

The archbishop added that the Portland archdiocese cannot pay the combined $155 million sought by two plaintiffs in separate lawsuits involving purported abuse by the Rev. Maurice Grammond, who was accused of molesting more than 50 boys beginning in the 1950s. Father Grammond died in 2002.

The two cases were set for trial yesterday, Archbishop Vlazny said. The bankruptcy filing halted the cases.

“This is not an effort to avoid responsibility. It is, in fact, the only way I can assure that other claimants can be offered fair compensation,” the archbishop wrote.

He also said that the bankruptcy would allow the diocese to “continue our good works” without fear of an impending large verdict and that the operation of its parishes and schools would continue as usual.

He added: “We have made every effort to settle these claims fairly, but the demand of each of these plaintiffs remains in the millions. I am committed to just compensation. These demands go beyond compensation. With 60 other claims pending, I cannot in justice and prudence pay the demands of these two plaintiffs.”

But David Slader, a lawyer for plaintiffs in sex-abuse cases involving the Portland archdiocese, dismissed the archbishop’s claim that the “pot of gold is pretty much empty right now.”

“The bishop hasn’t begun to touch his pot. He’s pretty much lying,” Mr. Slader told the Associated Press.

James Devereaux, a plaintiff in one of the cases held up yesterday, said: “We will continue our fight to finally get the archdiocese to accept the sin of its crimes.”

Chapter 11 bankruptcy frees an organization from the threat of creditors’ lawsuits, while it reorganizes. However, the filing also could open church records to the public and could require church leaders to give some control to the courts.

“This means all their books will be open to the courts and that an overseer will be appointed. It’s a good thing and a very significant move,” Richard Sipe, a married ex-priest and author of the book, “Celibacy in Crisis,” said yesterday.

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