Duluth diocese files bankruptcy over sex abuse judgment

Updated 5 p.m. | Posted 1:55 p.m.

The Diocese of Duluth on Monday filed for bankruptcy protection, saying that's the path it must take if it's to find a way to compensate clergy sexual abuse victims and continue the church's mission.

Last month, a jury ordered the diocese and a Catholic religious order to pay more than $8 million in damages to a man who was sexually abused by a priest in 1978. The diocese says it can't afford its nearly $5 million share of the settlement.

Explore the full investigation Clergy abuse, cover-up and crisis in the Twin Cities Catholic church

In a statement on the diocese website, the Rev. James Bissonette, vicar general of the diocese, said leaders were left with no choice but to file for reorganization.

The bankruptcy filing "safeguards the limited assets of the diocese and will ensure that the resources of the diocese can be shared justly with all (clergy abuse) victims" while letting the diocese continue its daily work, he added.

The diocese, which includes more than 56,000 Catholics and 92 parishes in ten northeastern Minnesota counties, says its budget last year totaled only $3.3 million.

Insurance coverage and available savings are "insufficient for such a large judgment, and no resources would be available for the remaining abuse victims who have brought claims," the diocese said.

The diocese has admitted to having credible accusations of sex abuse against 31 priests who served in the diocese.

It also acknowledges paying $780,000 in previous settlements. Much of that amount was covered by insurers. But currently, the diocese faces or could face 18 lawsuits by victims of alleged sex abuse.

Many of the clergy abuse cases working their way now through Minnesota courts were filed after state lawmakers passed the Child Victims Act in 2013. The law opened a three-year window for abuse victims to file claims that otherwise would have been barred under the statute of limitations.

Abuse victims can still get help and compensation, although that might take years of court action, said Mike Finnegan, an attorney who represents abuse victims.

"They can still come forward and seek accountability from the archdiocese. There is insurance coverage, too," he told reporters. "Survivors can pursue that insurance coverage, as well, through the bankruptcy process."

Abuse victims and their advocates blasted the diocese for the bankruptcy filing.

"They're running off to bankruptcy court to keep a lid on their secrets, basically," said David Clohessy, director of SNAP, the Survivors Network of those Abused by Priests.

He said that by filing for bankruptcy the diocese can conceal misdeeds that could be revealed if abuse were to go to trial.

This is apparently the 13th Roman Catholic diocesan bankruptcy in the U.S, according to BishopAccountability.org.

The most recent filing was by the Archdiocese of St. Paul and Minneapolis this past January.

That bankruptcy is in court-ordered mediation, with the church, insurers, abuse victims and others trying to work out a plan for the reorganization of the archdiocese and compensation of victims.

The archdiocese and abuse victims and their attorneys are hoping for a substantial pot of insurance money to compensate abuse victims. But insurers have balked at the prospect of paying claims.

Insurance policies typically give insurers the right to exclude intentional wrongdoing from coverage and many victims have accused the church of repeatedly failing to stop known abusers from harming victims.

Insurers for the Duluth diocese could raise such arguments, too.