Spokane Diocese reaches $48 million settlement

After more than two years of sometimes bitter wrangling, the Spokane Diocese is heading out of bankruptcy.

The diocese agreed to pay at least $48 million to settle claims with more than 100 sex-abuse victims and other creditors in a reorganization plan filed Thursday in U.S. Bankruptcy Court.

Parishes would be responsible for raising $10 million of that amount, and insurers would pay about $20 million, according to a statement issued Thursday by U.S. Bankruptcy Court Judge Gregg Zive, the federal mediator. The diocese would pay the remaining $18 million through sales of its assets and contributions from various Catholic entities.

In addition, the plan calls for the diocese to post on its Web site the names of all known abusers, give victims a forum to tell about their ordeals, and have Bishop William Skylstad identify abusive priests from the pulpits of the parishes where they served.

The plan — which still needs to be confirmed by U.S. Bankruptcy Court Judge Patricia Williams and voted on by creditors — was reached after lengthy mediation among those representing known victims, victims who have yet to come forward, the diocese and parishes.

"This has been a long and difficult process," Zive said.

After the Catholic Church's nationwide sex-abuse scandal broke, the Spokane Diocese in December 2004 became the third in the nation to file for bankruptcy. It is now poised to be the third to emerge from bankruptcy, following the Tucson Diocese, which reached a $22 million settlement in 2005, and the Portland Archdiocese, which filed a plan to pay up to $75 million in December.

A fourth diocese — the Diocese of Davenport in Iowa — filed for bankruptcy last October.

The past two years have been frustrating for many Catholics in Spokane, where the church has long been a political and social force.

Parishioners feared losing their churches and schools as legal decisions went back and forth on whether such properties could be sold to help pay for abuse settlements. A $45.7 million settlement offer last February from the diocese to 75 victims who've filed lawsuits was later rejected by a judge who said it would be unfair to specify an amount for those victims but not others who hadn't yet filed lawsuits or come forward.

The plan filed Thursday outlines a way to pay victims who may come forward in the future.

Fred Naffziger, professor of business law at Indiana University South Bend, said it appeared to him that the plan "says the parishes will own their property, but in return, the parishes are making a substantial contribution to the diocese." Such a compromise, he said, avoids a precedent-setting court decision on who owns parish property.

"It sure needs to come to closure," said Dick Henricks, a retired railroad revenue forecaster and longtime member of Assumption parish in Spokane. "I would welcome that."

But Ann Corrigan, the mother of two sons who were abused by former Spokane priest Patrick O'Donnell, was wary. "I guess I'm just in disbelief until it really happens."

Attorneys and others involved in the case said they had agreed not to comment on the plan at this time.

Tim Kosnoff, an attorney for many of the victims, said only that "I think people will be anxious to see the plan. ... I think we just have to wait till people have had the chance to read it and digest it."

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com