Bankruptcy Filing Delays Delaware Church Sex Abuse Case

ANNAPOLIS, Maryland – A sex abuse case against Delaware's Catholic Diocese of Wilmington and a former priest will be delayed after the church filed for federal bankruptcy protection on the eve of proceedings.

The bankruptcy filing late Sunday automatically delays the case that had been set to start Monday in Kent County Superior Court, the first of eight consecutive abuse trials scheduled in Delaware.

"This is a painful decision, one that I had hoped and prayed I would never have to make," said the Rev. W. Francis Malooly, the bishop of the diocese, on the diocese's Web site.

Wilmington is the seventh U.S. Catholic diocese to seek bankruptcy protection since the church abuse scandal erupted seven years ago in the Archdiocese of Boston.

The diocese covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics.

Thomas Neuberger, an attorney representing 88 alleged victims, described the bankruptcy filing as a "desperate effort to hide the truth from the public and conceal the thousands of pages of scandalous documents" from being made public in court.

"This filing is the latest, sad chapter in the diocese's decades long 'cover-up' of these despicable crimes, to maintain the secrecy surrounding its responsibility and complicity in the sexual abuse of hundreds of Catholic children," Neuberger said in a statement.

Malooly said the decision was made "after careful consideration and after consultation with my close advisers and counselors" and that he believed "we have no other choice." He said the bankruptcy filing "offers the best opportunity, given finite resources, to provide the fairest possible treatment of all victims of sexual abuse by priests of our Diocese."

He added that the diocese hoped the bankruptcy filing "will enable us to fairly compensate all victims through a single process established by the Bankruptcy Court."

The bankruptcy filing lists the diocese's assets as being between $50 million and $100 million but said its estimated debt is between $100 million and $500 million. Lawsuit plaintiffs as well as banks and pensions were listed as creditors.

Monday's case would have been the first to come to trial under a Delaware law that created a two-year "lookback" window that allowed claims of abuse to be brought regardless of whether the statute of limitations had expired. More than 100 lawsuits were filed before the period ended this summer, with four being settled.

Civil liability is the only recourse for victims of abuse that happened long ago because the U.S. Supreme Court has said states cannot change the statute of limitations for criminal cases.

Neuberger said the diocese's action may mean some sick and aging victims — some who claim they were abused when they were as young as 8 — could die before getting their day in court.

Attorneys negotiated throughout Sunday trying to reach a settlement, but couldn't.

Before Wilmington, bankruptcy protection was also sought in abuse scandals by dioceses in Davenport, Iowa; Fairbanks, Alaska; Portland, Oregon; San Diego; Spokane, Washington; and Tucson, Arizona. The San Diego case was dismissed.

At least three of those bankruptcy cases ended with payments for victims. In May 2008, the Diocese of Davenport agreed to pay $37 million to more than 150 people. A $50 million settlement in 2007 involving about 175 lawsuits ended a bankruptcy filing by the Archdiocese of Portland, which set aside another $20 million for future claims. The Tucson diocese emerged from bankruptcy protection in 2005 after creating a fund of more than $20 million for people molested by clergy.

Neuberger said he would make court filings in Delaware to "meet this fraudulent tactic with the full and immediate force of the law." He also vowed to seek out all assets of the diocese and its parishes.

More than 20 Delaware plaintiffs have filed lawsuits against former priest Francis DeLuca. DeLuca served for 35 years but was defrocked last summer after having been jailed in 2007 in New York for repeatedly molesting his grandnephew.

An annual report filed earlier this year by the U.S. Conference of Catholic Bishops stated that the church has paid more than $2.6 billion in settlements and related expenses since 1950.