Diocese bankruptcy: Church sunk by $15 million sex-abuse settlement

The Roman Catholic Diocese of Helena, Montana, filed for bankruptcy protection Friday as part of a proposed $15 million settlement for hundreds of victims who say clergy members sexually abused them over decades while the church covered it up.

The bankruptcy reorganization plan comes after confidential mediation sessions with the plaintiffs' attorneys and insurers, resulting in a proposed deal to resolve the abuse claims, diocese officials said.

Bishop George Leo Thomas expressed "his profound sorrow" and apologized to the victims in a news conference.

"I know the pain is real, the pain is in the present tense, and in the name of the church, I want to say I'm sorry and we're sorry as a church," Thomas said.

In addition to the money, the diocese must publicly apologize, publish the names of clergy members who have been credibly accused of abuse, offer to meet with abuse survivors, provide victim counseling and reinforce its policies and procedures to prevent abuse, plaintiffs' attorneys said.

The diocese already has set up abuse-prevention programs, including worker screenings, a claims-review board and a hotline to report abuse.

The settlement details are being worked out, but the U.S. Bankruptcy Court in Montana would be responsible for approving and supervising the disbursement of $15 million to compensate the 362 victims identified in the two lawsuits.

In addition, at least $2.5 million will be set aside for victims who come forward later, according to the diocese.

The church anticipates paying that $2.5 million, with the rest paid by insurers.

The victims and creditors will have the chance to vote on the proposed settlement, diocese officials said.

Church officials are planning to pay the diocese's share of the settlement with cash, though they may have to sell some property in the future, Thomas said.

The diocese was in a precarious financial position before the lawsuits were filed, and a reorganization was already likely, he said.

Court documents filed Friday show the diocese has estimated assets between $1 million and $10 million, and estimated liabilities between $10 million and $50 million.

The Helena diocese is the 11th in America to seek bankruptcy protection in the face of sex-abuse claims.

David Clohessy, the executive director of the Survivors Network of those Abused by Priests, criticized the diocese for seeking bankruptcy protection, saying it will allow church officials to keep records closed that might have come out in a trial.

He also said the settlement falls short because it does not publicly name the church officials who shielded and protected predator clergy members.

"Those individuals have to be exposed and punished," Clohessy said.

Thomas said in response that church officials will comb their records to see if there were "intentional failures of leadership." But the records from the time of the abuse are incomplete, he said.

The two lawsuits filed in 2011 claim clergy members groomed and then abused the children from the 1940s to the 1970s. They claim the diocese shielded the offenders and knew or should have known the threat they posed to children.

The plaintiffs, the diocese and the Ursuline Sisters of the Western Province, another defendant, began mediation talks in 2012, but the talks faltered with legal challenges by the church's insurers over the claims they are obligated to cover.

A court hearing was scheduled for Friday ahead of the first civil trials, which were to begin in March. Howard said she expects the court proceedings will be suspended.

Most clergy members who were accused in the lawsuits have died, and none remains in active ministry, diocese officials said.

In one of the lawsuits, the plaintiffs said they were repeatedly raped, fondled or forced to perform sex acts while at school, on the playground, on camping trips or at the victims' homes.

The second lawsuit, filed a week after the first in 2011, includes 95 of the 362 plaintiffs and contains similar allegations against priests, but also alleged that nuns at the Ursuline Academy in St. Ignatius abused dozens of Native American children.

The Ursulines are not part of the proposed settlement, the diocese said.

Blaine Tamaki, the plaintiffs' attorney in that lawsuit, said the case against the Ursulines will proceed to its July date.

Tom Johnson, an attorney for the Ursulines, acknowledged the sides were still far apart in negotiations, but that the order intends to either settle or file for bankruptcy on its own.

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