Posted August 2, 2011

By Joseph Ryan
Catholic News Service

WILMINGTON, Del. (CNS) – Bishop W. Francis Malooly of Wilmington is inviting survivors of clergy sexual abuse to meet with him to discuss further healing and reconciliation following a U.S. bankruptcy judge’s July 28 confirmation of a settlement plan that calls for the diocese to fund a $77.4 million trust to compensate about 150 survivors.

Under the plan the diocese will distribute a total of $101.4 million to its creditors. In addition to the $77.4 million, the Lay Employees’ Pension Trust will be funded with $10 million, Allied Irish Bank will receive $9.1 million, and about $5 million will pay professional fees.

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Bishop Malooly said he was pleased that the U.S. approved the Diocese of Wilmington’s reorganization plan “enabling us to emerge from Chapter 11 bankruptcy.”

“It is my hope and prayer that this plan will give survivors of clergy sexual abuse another means toward the healing that they so need and deserve, and enable us to live up to our commitments to our lay employees and creditors,” he said in a July 28 statement.

The diocese “will continue to assure that our parishes and schools are safe havens for our precious young people,” he said. “We will continue to comply with the letter and spirit of the ‘Charter for the Protection of Children and Young People’ adopted by the Catholic bishops of the United States in 2002.”

Bishop Malooly apologized in his statement “for the innocence that was stolen from our brothers and sisters at the hands of men who were supposed to be looking out for their best spiritual interests. I invite any and all survivors to meet with me to discuss how I as bishop and we as church can promote further healing and reconciliation.”

The diocese expects to exit bankruptcy once the settlement trust is established within 60 days of the court’s order approving the plan.

In addition to money from the Diocese of Wilmington Inc., which is seeking a $9 million commercial loan and other internal loans, the funding for the trust includes payments from insurance companies and about $62 million from Catholic organizations not involved in the bankruptcy, “nondebtor Catholic entities,” including $47 million from the Catholic Diocese Foundation, plus money from Catholic Cemeteries and Siena Hall, Seton Villa and Children’s Home.

The diocese also eliminated 22 positions in April to cut costs to pay for the settlement.

“When we filed for Chapter 11 reorganization in October of 2009,” Bishop Malooly’s statement said, “our goals were to justly and fairly compensate all survivors of clergy sexual abuse while maintaining to the best of our ability the charitable, spiritual and education ministries of our parishes, schools and other institutions. As we emerge from Chapter 11, I feel these goals have been reached.”

The judge’s order came after four days of confirmation hearings – July 8, 14, 27 and 28 – following approval of the diocese’s reorganization settlement plan by all survivors of clergy sexual abuse and other creditors, including lay employees of the diocese.

Confirmation of the settlement also ends pending lawsuits against parishes and commits the diocese to provide a committee of survivors its nonprivileged documents in the personnel files of abusers.

Prior to signing his order July 28, U.S. Bankruptcy Judge Christopher S. Sontchi said the Diocese of Wilmington bankruptcy was the most difficult case “I’ve had to deal with since I’ve been on the bench or in practice.”

He noted the case, involving the lives of survivors of clergy sexual abuse, was about more than money, but money is how civil justice metes out compensation. He said because the settlement also involves nonmonetary provisions for the diocese to follow, “it’s with some satisfaction that I’m able to confirm this plan today.”

Sontchi said he hoped the settlement confirmations helps the diocese begin healing its relationship with the community at large and Catholics in particular.

Tony Flynn, the diocesan attorney, said Aug. 1 that the diocese filing for bankruptcy was “definitely the right thing to do, as painful as it was.”

He said the December 2010 jury verdict that directed St. Elizabeth’s Parish in Wilmington to pay $3 million to a single survivor of clergy sexual abuse, “confirmed that we had to file for bankruptcy in order to get all claims together in one proceeding.”

Flynn said the average settlement for each survivor of clergy sex abuse would be about $515,000.

Tragic actions resulted in great costs, he said, but “nevertheless, we obtained the objectives” of bankruptcy – settling with survivors, keeping parish services and schools intact and paying employee pensions.

The bankruptcy’s goals were accomplished but “it was very disappointing how expensive it was with all the professional fees,” Flynn added.

Members of the diocesan Lay Employees Committee, also creditors in the bankruptcy, also expressed relief at the settlement. The settlement plan provides for increasing the funding of the lay employees pension to $20 million by the end of 2011.

“It was due,” said Katrina Eichler, Catholic Charities’ southern regional director in Dover. “It was long overdue. I hope it will start the healing and repair.”

In his statement last week after nearly 650 days in Chapter 11 bankruptcy, Bishop Malooly said the settlement “marks a moment of transition for our diocese. The road ahead will not be an easy one, but I have experienced the spirit of the Catholic community of Delaware and the Eastern Shore of Maryland and I am optimistic that together, with God’s help, we have a bright future.”

The diocese filed its Chapter 11 bankruptcy petition on Oct. 18, 2009. If it exits bankruptcy by the end of September, the process would have taken nearly two years.