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Diocese of Duluth files for bankruptcy

By Tom Olsen

Forum News Service

DULUTH, Minn. -- Facing a nearly $5 million jury verdict and numerous pending lawsuits over child sexual abuse committed by priests, the Diocese of Duluth turned to bankruptcy protection Monday.

The Rev. James Bissonette, vicar general of the diocese, announced the filing for Chapter 11 bankruptcy in a statement on the diocese’s website.

A St. Paul jury last month found the diocese negligent in the supervision of a priest who was accused of sexually abusing a teenage boy in Itasca County in the 1970s. The diocese was ordered to pay about $4.9 million in damages awarded by the jury.

Five other child sexual abuse claims also are pending in State District Court, according to online records.

The claims all were brought under the Minnesota Child Victims Act, an act of the state Legislature which opened a three-year window for abuse victims to file lawsuits that would otherwise be barred by statutes of limitation. The window is set to expire in May, and attorneys have said they expect a flurry of activity as the deadline nears. 

The bankruptcy filing is likely to have major ramifications on pending and yet-to-be-filed cases, as the diocese’s assets go under court protection.

“There is sadness in having to proceed in this fashion,” Bissonette said in the statement. “After the recent trial, the Diocese again attempted to reach a mutually-agreeable resolution. Up to this point, the Diocese has not been able to reach such a settlement, and given the magnitude of the verdict, the Diocese was left with no choice but to file for reorganization.

“The decision to file today safeguards the limited assets of the Diocese and will ensure that the resources of the Diocese can be shared justly with all victims, while allowing the day-to-day operation of the work of the Church to continue. This decision is in keeping with our approach since the enactment of the Child Victims Act, which has been to put abuse victims first, to pursue the truth with transparency and to do the right thing in the right way.”

The Diocese of Duluth joins other branches of the Catholic Church in filing for bankruptcy, including the Archdiocese of St. Paul and Minneapolis, which entered Chapter 11 protection in January.

An attorney representing abuse victims planned to hold a news conference on Monday afternoon to address the implications of the filing.