Catholic Diocese of Spokane, Washington



‘I am convinced that Chapter 11
provides justice for everyone involved’

by Bishop William S. Skylstad

(From the Nov. 11, 2004 edition of the Inland Register)

This is a letter I had sincerely hoped I would not have to write.

Although the news is disappointing, it is not without hope.

As some of you may know, I wrote to the households of the diocese a year ago to update everyone about the status of the sexual abuse situation in the Spokane Diocese. At that time, I said that bankruptcy was not an option for the diocese.

In another letter, mailed Oct 29 of this year, I explained that the situation of the diocese had changed and that Chapter 11 Reorganization under the Federal Bankruptcy Code was indeed a possibility, if other solutions could not be reached which satisfied the parties involved.

Father Steve Dublinski, Vicar General of the Spokane Diocese, spent four days last week in Seattle, accompanied by diocesan legal counsel, in an attempt to reach settlements in 28 pending claims against the diocese.

The claims arose out of the actions of former Spokane Diocesan priest Patrick O’Donnell. Bear in mind, too, that another 30 claims are pending against the diocese, in other cases. The plaintiffs in these lawsuits are claiming tens of millions of dollars.

Despite mediation involving the diocese, plaintiffs’ legal counsel, and representatives of insurance carriers, settlements could not be reached.

Our goal then was to reach a solution which would provide fairness, justice and equity for everyone – for the victims, and for the diocese as a whole. Our hope, our goal, was to reach a solution that would not only deal fairly with victims, but would allow us to continue the ministry and mission of the Diocese of Spokane.

That remains our goal: fairness, justice, and equity for victims; continuing the mission and ministry of the diocese.

And so it is that I have accepted the recommendation of the Bishop’s Finance Council: The Catholic Diocese of Spokane will begin preparations immediately to file for Chapter 11 Reorganization in Federal Bankruptcy Court on or before Nov. 29. I am convinced that Chapter 11 provides justice for everyone involved.

We have a responsibility to meet the reasonable claims of plaintiffs. We have a responsibility as well to protect the mission and ministry of the Catholic Church in Eastern Washington.

The Spokane Diocese did not take shape a few years ago, or even a few decades ago. The diocese was established in 1913. The Catholic Church was a positive presence in Eastern Washington long before that.

I did not build the Spokane Diocese. What I do, what all of you do, takes place on the foundations put down by those who have gone before us. We stand with Catholics dating back a century and more – we stand with the help of their hard work, their prayer, their contributions. We add our own efforts to what has gone before. All that they did to help build up the Catholic Church in Eastern Washington.

All of that – the history, the work, the investment of self by countless Catholics, laity, ordained, Religious – we receive all of that as a sacred responsibility. We have been entrusted with a genuine legacy. As your bishop, I take that sacred trust very seriously. I will not dismiss it. Yes, we must meet the needs of victims. Yes, we must continue the ministry and mission of the Church in Eastern Washington.

What will Chapter 11 Reorganization mean?

You may remember that earlier this year, two other dioceses in the United States filed for Chapter 11: the Archdiocese of Portland, Ore., and the Diocese of Tucson, Ariz. More recently, the Diocese of Davenport, Iowa, was on the brink of filing when settlements finally were reached with claimants.

Chapter 11 is a complicated procedure, but here are some of the more important events in the process.

The purpose of Chapter 11 is to allow a business or organization to reorganize financially, with two goals: meeting the financial claims of those to whom it owes money, and to emerge as a viable business or organization at the end of the process, with operations intact. We will maintain our normal operations as much as possible; we will continue to pay our employees their salaries and their benefits.

At some point, a notice will be published, asking anyone with claims to come forward by a specific date. The court will gather all the claims for consideration and resolution. The diocese will propose a Reorganization plan.

Part of our work will be presentation to the court of a disclosure statement, with complete financial information. If that disclosure statement is approved by the court, creditors will then vote on the Reorganization plan. If the plan is confirmed, the claims will be satisfied, as provided for in the Reorganization plan. The diocese will then emerge from Chapter 11 and operate as described in the Reorganization plan. As I said: a goal of the Reorganization plan is to satisfy the claims, while allowing the continued mission and ministry of the Diocese of Spokane – a sacred trust.

In many ways, the Reorganization may better assist victims seeking settlements. It also will allow the diocese to continue to minister.

Simply put, Chapter 11 moves the plaintiff claims into Federal Bankruptcy Court. The Chapter 11 process will ascertain which of the diocese’s assets can be used to satisfy claims, equally and fairly. There will be no “race to the courthouse,” so that those who file claims first, or are willing to settle first, will not receive preferential treatment over other plaintiffs filing later. All plaintiffs will be treated equally, fairly, and with justice.

Let me reassure you that the contributions to the recent Campaign for the Education of Seminarians, “Here I Am, Lord,” are completely safe and unaffected by this process. Those funds are part of the Catholic Foundation, which is a non-profit 501(c)(3) corporation, a separate corporation from the Catholic Diocese of Spokane. Likewise, our employee retirement funds are separate and safe. Catholic Charities, too, is a non-profit 501(c)(3) corporation, separate from the diocese. I encourage you to continue to fulfill your pledges and financial support of these vital ministries.

Reorganization will mean more work for my staff at the Catholic Pastoral Center. Their response to this situation has been humbling and gratifying. The consistent question I hear is: “What can we do to help?”

The Reorganization will mean more paperwork, more preparation work, in dealing with the court in terms of our finances and financial transactions. Some activities may be slowed for a time, but with the grace of God and the hard work of all of us, the diocese will continue to operate as we seek to minister, not just to the Catholic community, but all of Eastern Washington.

The Catholic Church has been a beacon of faith, hope, and charity in Eastern Washington for better than 100 years. We will continue to be that beacon during this process, and beyond.

Thank you for your encouragement, your support, your prayers. Continue to pray for me, as I pray for you, always.


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