Wednesday, June 16, 2004

Diocese Threatens Bankruptcy

From Diocese of Tucson weighs bankruptcy | The Arizona Daily Star :

"Lawyers for the Roman Catholic Diocese of Tucson say Bishop Gerald F. Kicanas is making plans to file for Chapter 11 bankruptcy protection.

If the diocese follows through on what its attorneys say is 'the only viable' way to financially resolve pending lawsuits alleging sexual abuse by clergy, it will be the first U.S. Catholic diocese to file for bankruptcy. Under bankruptcy protection, local Catholic parishioners would be in the unprecedented position of being part of a church whose purse strings are monitored by the courts.

Chapter 11 falls under the federal bankruptcy code and is a way for insolvent corporations and others to reorganize debt. Kicanas predicted Tuesday that filing for Chapter 11 could allow the operations of the diocese and its 74 parishes to carry on normally while it makes a plan to pay costs related to the abuse claims.

He compared the scenario to the way United Airlines has continued to fly its planes since filing for bankruptcy protection in December 2002.

Major business decisions would need the approval of bankruptcy court. "