For Immediate Release

Voice of The Faithful Comments on Spokane Bankruptcy Decision

The decision of Judge Patricia Williams in the bankruptcy case of the Diocese of Spokane may have far-reaching implications for the Catholic Church in the United States.

On Friday (August 26, 2005), Judge Williams decided that the U.S. Bankruptcy Court could exercise jurisdiction over the assets of individual parishes in the Spokane diocese, as well as assets held in the diocesan name. The court ruled that canon law, which governs internal matters, cannot be used to shield assets from creditors or from the financial effects of sexual abuse lawsuits.

This decision raises important questions about who owns Church property, what assets can be seized to satisfy claims, and the future ownership and governance of Catholic parishes.

Voice of the Faithful believes that all concerned people need to keep three points in mind.

First, there is a need to defuse anger and fear.

One possible consequence is a wave of anger toward those survivors of clergy sexual abuse who are entitled to bring lawsuits against the diocese. While parishioners fears may be understandable, any such anger is misplaced when directed toward the abused and not the abusers. It was Church personnel who committed heinous acts against children; it was Church administrators who concealed, covered-up, and deceived others about the abuse. Lashing out at victims of abuse is shooting the messenger -- they are the people who have taught us the truth about a corrupted clerical system.

As Val Pember of Spokane VOTF said, "This is an opportunity for pastors, parish councils and the laity to begin serious dialogue on the issue of victim restitution and Church finances. The parishioners have to be included in the discussion and decisions now because it will be their wallets that are affected."

There is a need for survivors and parishioners to sit together and shape solutions that do not result in fire sales of churches and schools. VOTF strongly supports dialogue based on these principles.

Second, we must understand the Spokane precedent.

The Spokane decision may also put Vatican policy on a collision course with American bankruptcy law. Because this case was heard in a federal bankruptcy court, it will likely be cited as precedent in other bankruptcy proceedings (e.g., Portland, OR). Spokane Bishop William S. Skylstadt has already initiated a legal appeal to a federal appeals court. The decision will certainly be studied carefully by all Catholics, including Church leaders, for its financial accountability and governance implications. Many American dioceses face financial troubles and the Spokane decision may prove instructive.

Meanwhile, settlements with survivors may be delayed. We believe that justice delayed is justice denied and urge movement to resolve outstanding cases. "... (I)t is apparent that the bishop used bankruptcy as a modem for resolving the issue of victim restitution at the expense of parishes and the investments made by parishioners over the years. The upcoming promised appeal will definitely delay a speedy resolution of claims. ..." (Barbara Hutchison, Spokane VOTF)

Ironically, this decision may strengthen the argument of Archbishop O'Malley of Boston who has claimed that the Roman Catholic Archdiocese of Boston (RCAB) includes the assets of all parishes. His authority includes the power to open, close, merge, or suppress parishes and use the assets as he deems best. Meanwhile the litigating "vigiling" parishes claim that legal statutes limit his ownership to mere legal title (trustee) for benefit of the parishes. The Spokane decision will not undo the Vatican finding that the suppression decrees for eight parishes in the Archdiocese of Boston were "defective," but it does reaffirm the inclusive nature of the "corporation sole."

Third, we must press for transparency and full financial disclosure.

The Spokane decision reinforces calls for greater financial disclosure, such as that called for by Massachusetts State Senator Marian Walsh's proposed financial disclosure legislation. The bill would require that churches publish a list of all real properties owned and file an annual report detailing the sources and uses of donations. The Spokane diocese will now have to provide the bankruptcy court with such detailed information.

The Spokane decision is another small step in the continuing struggle to bring greater sunlight to the financial affairs of the Catholic Church in America. It is a loss for Bishop Skylstad, who is also the president of the US Conference of Catholic Bishops, and his theory of Church ownership and responsibility. However, it is not an unvarnished victory for advocates of accountability and transparency.

What will happen next?

There are no quick solutions in sight. In Tucson, AZ, Portland, OR, and Nashville, TN, bishops have also tried to decouple the liability of their diocese from the assets of the parishes. During the bankruptcy process in Tucson, for example, Bishop Gerald Kicanis successfully argued that the assets of the parishes, while legally listed in his name in the county real estate records, really belonged to the parish, a separate juridical person, and that he, the bishop, was merely holding these assets in trust. This position was similar to the Spokane argument.

Having successfully shielded most parish assets from the claims of sex abuse victims, Bishop Kicanis has now created a panel of lay people and clergy to draw up legal documents that will "transform" Tucson parishes into 76 separate non-profit corporations. Yet the makeup of the new parish boards is unsettled -- one proposal would have governance vested in the bishop, his vicar general (akin to a chief operating officer), the parish pastor (appointed by the bishop), and two handpicked laypeople. Such a system seems calculated to make parishes appear independent, but the system remains firmly within the bishop's control.

The laity has a great stake in ensuring a genuine voice in the governance of such parish corporations. Puppet boards fail that test. Only independently elected representatives, working with their clergy and their bishop, can meet the test of fiduciary integrity that is required. Lay representatives are stewards for all of the Catholics in a community.

"Accountability remains a challenging concept to, and within, the current leadership of the Catholic Church" said James E. Post, president of Voice of the Faithful.