c. 2004 Religion News Service

(UNDATED) The bishop of the Roman Catholic diocese of Tucson sent a letter to parishioners on Wednesday (June 16) warning them that the diocese may have to file for Chapter 11 bankruptcy protection.

The letter, from Bishop Gerald Kicanas, explains why the diocese asked a state court on Monday for a continuance on a sexual abuse suit while it studies the feasibility of filing for bankruptcy.

While the letter states that bankruptcy may be “the only option for the diocese,” the bishop said in an interview that no action is imminent and that the diocese “will continue to explore our options to heal the hurt of those who have suffered while also continuing the mission of the church.”

If the Tucson diocese filed for bankruptcy, it would be the first in the United States to take that step. The Archdiocese of Boston appeared to be ready to make the move in 2002 but avoided it by closing 65 parishes and selling off millions of dollars in assets.

The Tucson diocese is a “mission diocese,” Kicanas said, which means that a large part of its financial resources come from charity groups that lie outside its boundaries.

A report issued by the diocese listed annual income for the fiscal year 2003 at $5.47 million. The diocese does not list income from its parishes or schools as assets, said Fred Allison, the diocesan community relations director. Lawyers for the plaintiffs in the pending sexual abuse cases against the diocese argue that they should.

The diocese has been in financial straits since an expensive investment in a television station went bust in the late 1980s, Allison said.

In 2002 the Tucson diocese reached an out-of-court settlement with 10 men and their families who said that they had been sexually abused by four local priests. The amount of the settlement has not been disclosed, but some news reports have estimated that it could be as high as $16 million.

The diocese’s insurance carriers have refused to cover any of the money paid to settle the claims.

The Tucson diocese has at least three lawsuits scheduled to be heard by the courts this fall, including the one for which a continuance was issued on Monday (June 14).

Earlier this year, a diocesan report disclosed that 100 victims have accused 26 of its priests of sexual abuse.

Advocates for victims of sexual abuse by the clergy expressed doubts about the diocese’s bankruptcy claims.

“Until now, it has been essentially a public-relations and legal-defense maneuver only,” David Clohessy, national director of the Survivors Network of Those Abused by Priests, told the Arizona Republic.

“This may be as well. I would remain skeptical, given the track record of deceit and given the secrecy around church finances.”

Should the Tucson diocese file for bankruptcy, the diocese and the 71 parishes it oversees would continue to operate but the courts would essentially supervise its finances. The diocese would have to disclose all of its financial information and significant business decisions would need to be approved by bankruptcy court.

Lawyers for victims of sexual abuse, who have been asking the diocese to provide “full financial disclosure” as part of the ongoing lawsuits, are dubious that the Tucson diocese will take such an extreme measure.

But an attorney who has represented the diocese told the Arizona Republic that Kicanas may be out of options.

“I don’t see how he has any alternative,” Barry MacBan, the attorney, said. “If it happens, it will be this summer, no later than the end of August.”

KRE/JL END BURKE