The Archdiocese of Agana is seeking bankruptcy reorganization as it faces more than 180 claims of sexual abuse allegedly perpetrated by certain former Catholic priests on Guam.
The move will allow the archdiocese to maintain normal operations while also establishing a process to sell some assets to pay survivors of clergy sex abuse as well as other creditors.
A press conference Wednesday announced the decision.
Ford Elsaesser, a bankruptcy attorney for the archdiocese, could not state the exact amount of existing debt owed by the church but said all liabilities and assets will have to be identified, including claims by abuse survivors and other debt.
"I can't give an exact number because we want to be certain it's right ... It's extremely important to be accurate. We have bank loans and obligations ... that information will be forthcoming," Elsaesser said.
Meanwhile, the archdiocese's insurers are expected to make a "substantial contribution" toward settling abuse claims, he added.
'The only realistic path'
Some attorneys representing certain sex abuse victims welcomed the announcement.
"Bankruptcy provides the only realistic path to settlement of pending and future claims," said attorney Leander James, of the law firm James, Vernon and Weeks, who represents several victims alongside local attorney Tony Perez.
Perez reached undisclosed settlements for several of their clients with the Capuchin Franciscan Order, Sisters of Mercy, and the Boy Scouts of America, but not with the archdiocese.
“We were pleased to win settlements with the archdiocese’s co-defendants in the case. We can now help sexual abuse survivors reach fair settlements with the Archdiocese through the bankruptcy process,” Perez stated.
The James, Vernon and Weeks law firm has represented hundreds of survivors of sexual abuse across the country in bankruptcies filed by Catholic dioceses and religious orders across the country.
“This bankruptcy filing will automatically stop any further action in the lawsuits that have been filed, and it will create a deadline for all Guam clergy abuse victims to file claims,” James stated. "It will be important for those who have not come forward to do so and file their claim."
There have been only two cases settled by the archdiocese and while these were monetary settlements, the amount was not provided during the press conference Wednesday.
The archdiocese anticipates filing bankruptcy between mid-December 2018 and mid-January 2019. This is followed by a four- to five-month notice period to inform abuse survivors of the proceedings and file their claims, Elsaesser said.
A bankruptcy judge will set a deadline to file all claims, according to Elsaesser. But he added that in virtually all of these cases, a future claims trust is set up that reserves funding for claimants should they fail to meet the cutoff date.
"We anticipate that process will generate additional claims that have not been brought yet," He said. "But that will be the opportunity for all abuse survivors ... through a very simple and straightforward process to file their claim."
Perez and the group of attorneys are urging victims to come forward before the deadline to ensure they have “access to justice” while also remaining anonymous if they wish.
"This bankruptcy will provide an opportunity for abuse victims who file timely claims to be compensated while also allowing the archdiocese to retain sufficient resources to continue its work," said attorney Craig Vernon, who was a lead attorney in a recent $20 million settlement with the Diocese of Great Falls-Billings in Montana.
Schools and parishes to continue
The archdiocese will file under Chapter 11 of the federal bankruptcy code, allowing its operations to continue while temporarily protecting the church from creditors as it reorganizes and pays its debts.
The archdiocese previously announced it was selling certain real estate assets, including the former seminary and former Accion Hotel for $7.5 million, and the Archbishop's hilltop residence and chancery offices where Pope John Paul II stayed during his Guam visit.
Elsaesser refrained from definitively stating that there would be no impact on Catholic schools and parishes but said the archdiocese did not believe their operations would be affected.
In the case of the Spokane, Washington, Diocese's 89-month bankruptcy, a judge ruled that churches, schools and other assets belonged to the diocese and could be sold, if necessary, to pay victims.
Elsaesser said "that ruling was fully reversed on appeal" and "after that appeal we were able to reach an overall settlement with the plaintiffs in that case."
In that case, Elsaesser represented the parishes, which were able to operate normally despite bankruptcy proceedings, he said.
According to the watchdog group Bishopsaccountability.org, over the last 14 years, 19 Catholic dioceses and religious orders in the United States have filed for bankruptcy protection as they faced massive financial liabilities because of clergy sexual abuse claims.
The organization lists the following top three highest settlements:
• 2015- the Archdiocese of St. Paul and Minneapolis, Minnesota, agreed to pay $210 million to an estimated 400 victims.
• 2009- the Oregon Province of the Jesuits agreed to pay $166 million to nearly 500 victims.
• 2007- the Diocese of San Diego, California, agreed to pay $198 million to 144 victims.
The watchdog group indicated that nearly $3 billion has been paid in out-of-court settlements and court orders since the mid-1980s by Catholic dioceses and religious orders.