Catholic Diocese of Spokane, Washington

From the

Official News Magazine of the Diocese of Spokane

Deacon Eric Meisfjord, Editor
P.O. Box 48, Spokane WA 99210
(509) 358-7340; FAX: (509) 358-7302

From Justice to Healing and Renewal: The Chapter 11 Settlement Campaign

by Robert Hailey and Father Michael Savelesky, for the Inland Register

(From the May 3, 2007 edition of the Inland Register)

In union with Bishop William Skylstad, pastors, parish leaders and administrators from throughout the diocese have joined forces to seek participation from the Catholic faithful in a Chapter 11 Settlement Campaign. The Campaign will have an impact every household registered in a parish in the 13 counties of Eastern Washington which comprise the Diocese of Spokane.

The Settlement Campaign is the result of an agreement reached among the 82 parishes in the diocese during recent bankruptcy negotiations. The agreement is for the parishes to fund collectively $10 million of a $48 million settlement sum agreed to in the Plan of Reorganization approved in bankruptcy court on April 24. The long-anticipated Plan serves as a map for ending the diocese’s Chapter 11 bankruptcy case.

The Settlement Campaign already has started in earnest in several parishes. According to Campaign strategy, every Catholic household will be asked to participate in meeting the parishes’ $10 million obligation by engaging in two actions.

The first is an immediate and generous financial contribution to the Campaign. The second is the making of a four-year pledge. The latter action is based on the assumption that most parishes will require a period of time to complete their individual share of the collective financial commitment.

This arrangement is unique in the world of bankruptcy. Its successful satisfaction depends directly on the solicitation of voluntary contributions from parishioners. Other dioceses which have settled bankruptcy cases recently have had funds in reserve to satisfy their financial obligations. It has been obvious since the beginning of the Spokane Diocese’s bankruptcy case, however, that contributions from the parishes would have to be sought. Even at the time the bankruptcy was filed (Dec. 6, 2004), diocesan assets were limited. Now those assets are all but exhausted.

The Chapter 11 Settlement Campaign appropriately bears the theme “From Justice to Healing and Renewal.” The Campaign is part of a larger effort by the Catholic community to implement the Plan of Reorganization, which provides financial compensation to scores of victims of sexual abuse. The diocesan family is called by Christ to assure justice. The broader context for the implementation of the Plan of Reorganization also must foster healing, reconciliation and renewal, not only for the survivors of abuse, but also for all the faithful in Christ’s Church.

Specially prepared Q/A pages planned for mailing to the faithful from both bishop and pastor will explain the need and urgency of this Campaign. Although these and other campaign materials will be provided as support, the individual parish is responsible for designing its own fundraising effort. This effort, coordinated with the diocese-wide mailing to all parishioner households, includes solicitation of funds, accounting for contributions and the management of pledge statements.

The initial phase of the Campaign extends through the months of May and June.

A follow-up to the Campaign is anticipated for late September or early October of this year.

Campaign highlights

The Chapter 11 Settlement Campaign has a multiple focus.

The first is obvious: the compensation of victims of sexual abuse. Equally important, however, is the preservation of the mission of the Catholic Church in eastern Washington. The Plan of Reorganization provides a concrete way of satisfying these two goals for all the parishes.

To establish stability for the future of the Church’s ministry, the Plan of Reorganization also provides the means for each parish to establish clear legal identity as a separate civil corporation, making the parishes far less vulnerable in the event of lawsuits against either the diocese as a corporation sole or against any of the other parishes. Washington State law permits such nonprofit corporations to hold title to property. In a sense, by participating financially in the bankruptcy settlement, the Plan sets up the mechanism for the individual parish to “buy” its property from the corporation sole (the diocese). Once the new parish civil entities are formed, the controversy about ownership of parish property in the diocese ends. Property ownership clearly will be in the hands of the parishes.

Parish participation through the Settlement Campaign in the implementation of the Plan of Reorganization also provides the parishes a release from any threat of litigation against them for any claims for any events prior to Dec. 6, 2004.

Provision for these releases and the clear ownership of property provided under the stipulations of the Plan of Reorganization shore up the future patrimony of the parishes. Participation in the funding of the Plan of Reorganization directly benefits the individual parishes. Non-participation, on the other hand – although it is a free option – is harmful to the parish.

Pro-rata goals

The parishes are obliged to deposit $10 million in the bankruptcy’s Plan Trust by Dec. 31, 2007. It is to their advantage, nevertheless, to satisfy their collective commitment by Oct. 1, 2007, because after that date, the Plan of Reorganization stipulates that interest will be charged on any part of the $10 million not on deposit.

All parishes of the diocese joined the Association of Parishes (AOP) during bankruptcy proceedings. Through the efforts of the AOP, pastors and parish administrators that each parish in the diocese would pay a pro-rated portion of the collective $10 million contribution to the $48 settlement sum. The settlement goal for each parish was based on the same percentage reflected in the parish goals for the 2006 Annual Catholic Appeal.

With proper planning and execution – and, admittedly, sacrifice - the parishes in the diocese will be able to meet or even exceed their goals. If a particular parish cannot meet its goal in the course of the Settlement Campaign, the parish is responsible for devising a plan by which it eventually will be able to do so. The diocese itself has no surplus funds to satisfy a shortfall.

Parishes which are falling short of their goal by the Oct. 1 deadline may find it necessary to share in a common loan. The AOP already has started to make arrangements for this kind of financial assistance. Those parishes with shortfalls also may seek the voluntary assistance of another parish.

Arrangements for the loan required to satisfy the residual of the parishes’ $10 million sum will be made separately from any loan the Catholic Bishop of Spokane, a corporation sole, may need to make to satisfy its obligations under the Plan of Reorganization. The lending institution will identify the collateral required to guarantee repayment of the loan. The number of Campaign pledges will be central to that determination. Also, many parishes will be asked to offer their property as security. The collateralization may last even after a particular parish satisfies its pro-rata portion of the $10 million sum.

Only those parishes needing to borrow funds will be responsible for financing the set-up fees and interest expenses associated with the loan.

The distribution of parish deposits in the diocese’s Deposit & Loan Fund (D&L) before Dec. 31, 2007 is prohibited according under the Plan of Reorganization. Even after that date, these funds may not be available in sufficient time to be applied to the parish’s Campaign goal.

All funds collected in the Chapter 11 Settlement Campaign are morally and legally obligated to the campaign. Both civil law and the Church’s Canon Law require that the donor’s intent be respected. Contributions by an individual parish in excess of its Campaign goal must be applied to the Campaign. At the discretion of the pastor of the respective parish, its excess funds will be expended against Campaign expenses or provided for a parish which finds itself struggling to met its goal.

Steering Committee

In order to save on expenses, an outside firm will not be hired to conduct the Chapter 11 Settlement Campaign.

A Steering Committee has been organized to oversee the progress of the Campaign, offer advice, and respond to specific questions. The committee is composed of Father Steven Dublinski (Vicar General), Deacon Mike Miller (Bishop’s Secretary for Diocesan Business Affairs) , Chris Smith (Diocesan Development Director), and the two co-chairs of the AOP, Bob Hailey and Father Mike Savelesky.

The committee has established an e-mail address to channel questions about the Campaign:

Many of the Campaign materials will be posted on the Spokane Diocese’s website:

(Robert Hailey is Lay Co-Chair, and Father Savelesky is Priest Co-Chair, of the Association of Parishes.)

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