Chapter 7 - Solutions for a Financial Crisis » Chapter 7 Bankruptcy

Bankruptcy cases come in different shapes and sizes. Some can be quick and easy while others take years to settle.

The Catholic Diocese of Fairbanks in Alaska recently settled their bankruptcy case that was first filed two years ago. A judge in Alaska recently approved the reorganization plan, which the church hopes will help them finally move forward.

The Associated Press reports the Diocese filed in March 2008 after they were hit with several lawsuits claiming sexual abuse, some of which charged abuses dating back to the 1960s. The claims increased significantly after the church decided on a bankruptcy chapter, which placed many of the litigants as creditors.

In 2008, Bishop Donald Kettler said that the bankruptcy filing would be a “fair and equitable treatment” for everyone involved. He also said that he wanted to heal the harm that was done.

Most of the Diocese’s creditors were alleged victims of the abuse claims. They have all agreed to the terms of the new bankruptcy plan.

Under the revised bankruptcy plan the plaintiffs will be awarded $9.8 million and $2.5 million will be provided to attorneys, accountants and other professionals who worked on the case.

The payments made to the individuals will be decided on a case by case basis by a non-bias mediator.

Different factors will play a role into how much each individual receives, including: the nature and severity of abuse; the age of victim at the time the abuse started; and whether the perpetrator was in a position of trust to the victim.

The bankruptcy plan demands that the Fairbank Catholic Diocese posts a link to their website with the names of the alleged abusers for the next 10 years. This also includes any alleged abusers that are deceased.

The plan also demands that Bishop Donald Kettler visit every parish where alleged abuse occurred and apologize to the victims and their communities.

Bishop Kettler said that the diocese has had to cut back on its funds for training, fuel and other basics. Their also cut their workforce by 25 percent and the remaining staff has had to take pay cuts and mandatory furloughs.

The diocese will pay for the settlement with the sale of their properties such as their Catholic schools and offices. They will still be able to use the sold properties.

Their Alaskan parishes will provide $650,000 and their insurance company, Alaskan National Insurance, are set to pay $1.4 million.

U.S Bankruptcy Judge Donald MacDonald who handled the bankruptcy case said he, “never had a case like this in my nearly 20 years on the bench.”