Diocese of Milwaukee Seeks Chapter 11 Protection From Sexual Abuse Claims

The Diocese of Milwaukee filed a petition for chapter 11 relief on January 4, 2011 after twenty years of dealing with sexual abuse claims and an unfavorable ruling on its insurance coverage. In re Diocese of Milwaukee, Case No. 11-20059 (Bankr. E.D. Wisc. 1/4/11). Milwaukee is the eighth Catholic Diocese out of 194 to seek bankruptcy protection as the result of sex abuse claims. The Catholic Diocese bankruptcies illustrate how bankruptcy can help to resolve complex social problems as well as mere contractual disputes.

The Diocese bankruptcies share several common factors.

1. They are precipitated by overwhelming tort claims involving horrific crimes perpetrated by persons in positions of authority. According to the Diocese of Milwaukee, "A tragedy that runs contrary to every teaching and tradition of the Church has unfolded in the Church as a whole and in the Archdiocese in particular: a small number of clergy and others took advantage of their positions of trust and respect in the community to sexually abuse children. ("The Abuse")." The website of the Archdiocese lists 44 priests who have "substantiated reports of abuse of a minor."

2. Many of these incidents happened a long time ago. Of the 44 priests listed on the website, 17 are deceased. According to the Archdiocese, it took formal steps to address the abuse problem in 1989.

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