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Milwaukee Catholic diocese to file for bankruptcy citing clergy abuse lawsuits

Archbishop Jerome Listecki announced Tuesday that the Archodiocese of Milwaukee [official website] will file for Chapter 11 bankruptcy protection [press release] as a result of financial strain from lawsuits over the clergy sex abuse scandals [JURIST news archive]. The archdiocese's purpose in filing the petition is to achieve the dual goals of compensating remaining victims and survivors of the abuses and continuing to carry out essential ministerial functions of the archdiocese. Listecki expressed his belief that Chapter 11 reorganization was the best approach to address these goals:

It enables the archdiocese to use available funds to compensate all victims/survivors with unresolved claims in a single process overseen by a court, ensuring that all are treated equitably. In addition, by serving as a final call for legal claims against the archdiocese, the proceeding will allow the archdiocese to provide closure and resolution so we can move forward on stable financial ground, focused on our Gospel mission.
The Chapter 11 process provides federal court supervision of the development of a plan that requires that the remaining archdiocesan resources are allocated fairly. Additionally, the plan must be feasible and not likely to require any further modifications to keep the archdiocese financially viable. The archdiocese expects the reorganization process to be complete within 12 to 18 months.

Further heightening the financial frustrations of Milkwaukee's diocese is the recent Wisconsin Court of Appeals decision, which held [opinion text] that insurance companies do not have to contribute to the clergy abuse settlements. Milkwaukee is now the eighth American diocese to file for bankruptcy [NYT report] in response to the clergy sex scandals. Other state dioceses, such as Vermont [JURIST report], have resorted to selling church property and securing loans as means to meet the financial demands of the abuse settlements. Since 2007, in the US alone, the Catholic Church has settled more than 500 cases [JURIST news archive] of abuse for over $900 million.

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