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Diocese of Duluth files for bankruptcy

Dec 7, 2015

In the wake of last month’s court decision and its $8.1 million judgment, of which the Diocese of Duluth has been found responsible for $4.9 million, we have today filed on an emergency basis for bankruptcy protection in order to reorganize under Chapter 11. The necessity of this decision became clear after other efforts to reach a resolution that would assist all abuse victims and protect the Church’s mission had proved, as yet, unsuccessful. The Diocese will continue those good faith efforts during the bankruptcy process.

Father James Bissonette, vicar general of the Diocese, issued the following statement on behalf of the Diocese:

“There is sadness in having to proceed in this fashion. After the recent trial, the Diocese again attempted to reach a mutually-agreeable resolution. Up to this point, the Diocese has not been able to reach such a settlement, and given the magnitude of the verdict, the Diocese was left with no choice but to file for reorganization. The decision to file today safeguards the limited assets of the Diocese and will ensure that the resources of the Diocese can be shared justly with all victims, while allowing the day-to-day operation of the work of the Church to continue. This decision is in keeping with our approach since the enactment of the Child Victims Act, which has been to put abuse victims first, to pursue the truth with transparency and to do the right thing in the right way.”

Background information
  • The Child Victims Act in the State of Minnesota opened up the possibility of civil lawsuits against the Church for cases dating back decades, resulting in an as-yet-unknown number of those historical cases being brought to court.
  • The Doe 30 case, decided Nov. 4, held the Diocese of Duluth partially responsible for abuse suffered by a victim in 1978 with an $8.1 million judgment, with the Diocese held responsible for 60 percent of that judgment.
  • For more than two decades, since 1992, the Diocese has had safe environment policies in place and diligently followed them. These policies involve mandatory reporting, cooperation with law enforcement, background checks and other safety precautions for Diocesan personnel and safety training for children, and these policies are continually updated and improved.
  • The Diocesan operating budget for the last fiscal year was $3,294,627. Although there is insurance coverage and some Diocesan savings available in this case, it is insufficient for such a large judgment, and no resources would be available for the remaining abuse victims who have brought claims.