Diocese bankrupt over abuse claims

The Roman Catholic Archdiocese of Portland has become the first American diocese to file for bankruptcy following massive pay-outs resulting from clergy sex abuse lawsuits.

Portland’s bankruptcy filing halted the trial of a lawsuit against the late Reverend Maurice Grammond, who was accused of molesting more than 50 boys in the 1980s. Grammond died in 2002.

Plaintiffs in the two lawsuits involving Grammond have sought a total of more than €131.7m.

The archdiocese and its insurers already have paid €44.9m to settle more than 130 claims dating back to 1950 by people who say they were abused by priests. Most of those lawsuits have been filed since 1999.

The bankruptcy filing includes claims against the diocese from 20 pending priest abuse lawsuits, ranging in amounts from €4.5m to €112.2m.

The Chapter 11 filing did not include a list of the archdiocese’s assets, which will be filed at a later date.

Bud Bunce, spokesman for the 356,000-member archdiocese, said church operations will continue as usual.

“All the parishes will continue with their regular services,” Bunce said. “For the most part we anticipate the normal, everyday types of activities we do will continue.”

But the filing is far from everyday business – and raises concerns about secular oversight of church affairs.

“For a diocese to give up control like this, control over a lot of important decisions, a lot of spending decisions, it’s totally uncharted,” said Chuck Zech, an economics professor at Villanova University who specialises in Catholic church finances.

Chapter 11 bankruptcy frees an organisation from the threat of creditors’ lawsuits while it reorganises. However, it could also open church records to public scrutiny, and could require church leaders to cede some financial control to the courts.

Archbishop John Vlazny said the archdiocese tried to settle with the plaintiffs, but could not afford their offer.

“The pot of gold is pretty much empty right now,” Vlazny said.

Plaintiffs’ lawyer David Slader countered that the church was simply trying to avoid the details of the lawsuits coming out in court. “The bishop hasn’t begun to touch his pot. He is lying,” Slader said.

The archdiocese owns over €448.7m in tax-assessed properties, Slader said, and also has many investments, but he could not disclose the estimated value of those due to court-ordered confidentiality.

“The archdiocese is one of the wealthiest corporations in Oregon,” Slader said. Bunce declined to disclose the value of church assets.

Grammond served as a priest throughout the state from 1950 to 1985, when he took sick leave.

Allegations of sexual abuse against Grammond were first reported in 1991, but the charges did not become public until 1999 when a former altar boy sued him and the archdiocese. Grammond was suspended when he refused to fully cooperate in the church investigation.

Nationwide, abuse cases are known to have cost the church more than $360m (€291.9m) since 1950. Relatively few molestation lawsuits have actually gone to trial in the United States. Many settle beforehand.