Last December the Catholic Diocese of Spokane, WA filed for Chapter 11 bankruptcy protection in an effort to shield itself from $80 million in sexual abuse liabilities, claiming it had only $10 million in assets under its direct control. Now it looks like parishioners are going to pay for Spokane Bishop William Skylstad’s shameful legal maneuvers.
A federal bankruptcy judge ruled today that all the parish churches, parochial schools and other property of the Catholic Diocese of Spokane can be liquidated to pay victims of sexual abuse by priests.
The decision, expected to have ramifications for dioceses across the nation, is a major defeat for Spokane Bishop William Skylstad, who had argued that he did not control individual parishes and thus they were not available to cover settlement costs.
“It is not a violation of the First Amendment to apply federal bankruptcy law to identify and define property of the bankruptcy estate even though the Chapter 11 debtor is a religious organization,” U.S. Bankruptcy Judge Patricia Williams wrote in a 50-page decision.
“The disputed real property constitutes property of the estate,” she wrote.
Skylstad is the head of the US Conference of Catholic Bishops. Had his bankruptcy ploy succeeded, other dioceses facing similar sexual abuse claims surely would have followed suit in an effort to deny victims their financial settlements. But with this court decision, Skylstad has only succeeded in putting the liquidation decisions into the hands of a federal judge — any and all of the 82 parish churches and 16 parochial schools in 13 Eastern WA counties may now be sold off to settle victims’ claims.
Once again it is Spokane’s parishioners who will pay the price for the Diocese’s arrogance and neglect, but this court decision sends an important message to bishops elsewhere that they must face their legal obligations squarely, rather than relying on clever lawyers to shield them from the consequences of past mistakes.