Diocese of Wilmington files for bankruptcy

With the first in a series of major sex abuse trials set to start Monday, the Catholic Diocese of Wilmington filed for bankruptcy late Sunday after settlement talks with 13 alleged victims broke down.

The diocese, which includes Delaware and Maryland's Eastern Shore, is the seventh to file for bankruptcy in recent years under the weight of claims of sex abuse against priests, and the first on the East Coast.

Diocesan officials portrayed the filing as a way to fairly compensate all victims of its abusive priests through a single process established by the bankruptcy court. The bankruptcy filing in Wilmington automatically delays the start of the sex abuse trials.

"This is the best path to having fair treatment of all those who have been hurt by our priests over the years," said diocesan spokesman Robert Krebs.

But the victims' attorney characterized the move as another evasive tactic by the diocese, which is facing more than 142 sex-abuse lawsuits filed by people who claim to have been abused by priests in the diocese.

"It's clearly another dodge . . . part and parcel of the coverup," said Stephen J. Neuberger, a Wilmington attorney whose firm represents 88 of the alleged victims. "This is the latest stage of it."

The diocese is facing a flood of lawsuits, primarily because of a "look-back" law passed in 2007. It allowed victims of child sexual abuse who had been barred from filing suit against their abusers because of a two-year statute of limitations to go to court. The look-back law expired in July.
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According to Wilmington Bishop Francis Malooly, the diocese has spent $6.2 million to settle sex abuse cases since 2002. It expects its legal expenses to exceed $1.5 million this year.

The diocese of 230,000 Catholics listed assets in its Chapter 11 filing of between $50 million and $100 million and liabilities of $100 million to $500 million, according to the Associated Press.

Other diocese that have resorted to bankruptcy are Davenport, Iowa; Portland, Ore.; Fairbanks, Alaska; San Diego, Calif.; Spokane, Wash.; and Tucson, Ariz.