The Roman Catholic Diocese of Tucson (search) filed for bankruptcy protection Monday under the weight of debt and pending litigation from clerical sex abuse cases.
The diocese is only the second in the nation to seek the protection of a bankruptcy court in the wake of extensive and continuing legal action stemming from sexual abuse of children by parish priests.
The Portland (Ore.) Archdiocese was the first when it filed July 6.
The decision will subject the Tucson Diocese's financial operations to court scrutiny for the first time, and potentially open the way for non-church interference.
Tucson Bishop Gerald F. Kicanas (search) had signaled his intent in June, telling parishioners in a letter that bankruptcy protection appeared to be the only option remaining for the diocese, which serves some 350,000 Catholics in 75 parishes.
In 2002, the Tucson Diocese settled 11 lawsuits filed by 16 plaintiffs, including 10 victims who claimed abuse by four of its priests. Most of the abuse was alleged to have occurred from the 1960s through the 1990s. The settlement amount wasn't disclosed.
By the latest count, 22 more lawsuits with 34 plaintiffs have been brought against the diocese, all involving abuse allegations.
According to its financial statement, the diocese had $4.65 million in long-term debt and a $7 million deficit in unrestricted net assets as of June 30.
Kicanas said in a letter Monday to parishioners that the filing of a voluntary petition for a Chapter 11 bankruptcy reorganization represents "the best opportunity for healing and for the just and fair compensation of those who suffered sexual abuse by workers for the church in our diocese."
He said the diocese has tried its best to settle the lawsuits against it.
"I could not have agreed to a settlement if it would have meant stripping the diocese of everything and thus limiting our ability to respond to the needs of others who have been hurt who may come forward in the future," the bishop said, adding that the diocese would keep trying to resolve the lawsuits during the reorganization.
Attorneys for plaintiffs suing the diocese believe it has enough money to settle the cases now pending. They filed a motion recently in Yuma County Superior Court (search) seeking to block the diocese from transferring properties to affiliated Catholic bodies before a trial scheduled later this month.
Attorneys Lynne Cadigan and Kim Williamson said plaintiffs discovered that the diocese had transferred five properties between March and June.
"Such transfers may be designed to remove assets from the diocese in advance of a trial ... in an attempt to shield such assets from collection efforts" if the plaintiffs were to win damages, the motion said.