February 15

Bankrupt archdiocese pays lawyers, not victims

Milwaukee’s reorganization plan, meanwhile, would give far less to an estimated 125 victims of clergy sex abuse.

By M.l. Johnson
The Associated Press

MILWAUKEE — Bankruptcy has cost the Archdiocese of Milwaukee more than $12 million in legal fees and other expenses so far, and rejection of its recovery plan could force it to pay out $13 million more, its attorneys said in newly filed court documents.

The financial details were revealed in the archdiocese’s reorganization plan, filed late Wednesday night in federal bankruptcy court. The plan proposes providing $4 million to compensate an estimated 125 victims of clergy sex abuse – less than a fourth of those who filed claims – while other victims would receive therapy but no cash payment. That’s the smallest per-victim payment yet offered by the 11 dioceses that have filed for bankruptcy in the past decade.

The Milwaukee archdiocese filed for bankruptcy in 2011, saying it wouldn’t have enough money if courts ruled in favor of victims who filed lawsuits. The seemingly stingy sum offered in its reorganization plan can be partly explained by a long, bitter court fight that has drained the archdiocese’s finances and its relatively unique organizational structure, which puts much church money out of reach.

In all, the archdiocese said it has spent $6.9 million on its own attorneys during bankruptcy. It estimated its creditors’ attorney costs, which bankruptcy rules require the archdiocese to pay, at nearly $5.6 million. The creditors include hundreds of sexual abuse victims along with others who are owed money.

The archdiocese filed for bankruptcy after an October 2010 offer to pay $4.6 million to 23 victims was rejected. At the time, it had only $5.6 million that wasn’t earmarked for specific purposes, according to the court documents.

Victims’ attorneys had hoped to tap into more than $100 million held in trust funds and by the archdiocese’s 202 parishes. The archdiocese resisted, however, arguing that it didn’t control that money and had no right to spend it. Courts thus far have agreed, but not before the archdiocese racked up big legal bills.

One of the biggest fights has been over a cemetery trust fund established under New York Cardinal and former Milwaukee Archbishop Timothy Dolan. A judge ruled that fund off-limits last year, but the creditors have appealed that decision. That litigation alone cost nearly $2.5 million.

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