Diocese of Stockton Bankruptcy

Stockton Diocese Files for Chapter 11 Bankruptcy

On January 13, 2014, The Catholic Diocese of Stockton, California announced that it would be filing for Chapter 11 Bankruptcy. Why is the Diocese of Stockton filing for bankruptcy? According to Bishop Stephen Blaire, bankruptcy was the only available option left to deal with the church’s ever-growing legal expenses over allegations of sexual abuse by Stockton priests, such as the most recent Stockton priest indictment of Michael Eugene Kelly.

The Stockton Diocese’s legal expenses are at an estimated $14 million since allegations began 20 years ago. That $14 million has been expended on legal representation, court costs and paying settlements/judgments to victims. The diocese explained that they would not have the funds to pay any for any future lawsuits unless they pursue Chapter 11 Bankruptcy.

According to Blaire, “Very simply, we are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse.”

Other Diocese to File Bankruptcy Amidst Sex Abuse Scandal

The Diocese of Stockton is not the first Catholic Diocese to file for Chapter 11 debt relief since the church’s sexual abuse scandal broke. In fact, nine other dioceses in the United States have done so already. Those are:

  • Milwaukee, WI
  • San Diego, CA
  • Spokane, WA
  • Davenport, IA
  • Portland, OR
  • Tucson, AZ
  • Fairbanks, AK
  • Wilmington, Del.
  • Gallup, NM

From the first allegations of sex abuse through 2012, the Catholic Church in the United States as a whole has paid an estimated $2.2 billion in legal expenses.

What will Chapter 11 bankruptcy do for the diocese?

Many people are wondering what will happen once the Diocese of Stockton files for Chapter 11 bankruptcy. Chapter 11 bankruptcy will:

  • Pause any pending litigation – any lawsuits currently pending against the Diocese of Stockton would be put on hold.
  • Discharge liability – this would allow the diocese to release itself from liability stemming from alleged sex abuse in order to:
    • establish a victim trust which would provide financial compensation for victims of priest sexual abuse.

What exactly does this mean? If the Chapter 11 Bankruptcy goes through, it would essentially allow the Diocese of Stockton to avoid all civil cases related to this sexual abuse in the future.

Contact Manly, Stewart & Finaldi to Learn More

For more information on the Diocese of Stockton bankruptcy and how it could affect your case, please do not hesitate to contact a California sexual abuse attorney at our firm today. Manly, Stewart & Finaldi is passionate about pursuing justice on behalf of victims. In light of the Diocese of Stockton’s recent bankruptcy announcement, victims should know that our firm will continue to pursue financial compensation for victims. Call today for more information.