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Poorest Catholic Diocese in America Set to File for Bankruptcy

Published on 09/05/2013 -

By

The Roman Catholic Diocese of Gallup, New Mexico, the poorest diocese in the country, plans to file for Chapter 11 bankruptcy protection this month, according to a report from Reuters.

The church organization, like many dioceses across the country, has been crippled by the costs of litigation stemming from allegations of sexual abuse by its clergy members, which will likely lead it to file for bankruptcy, sources say.

High Litigation Costs Prompt Catholic Diocese to File Bankruptcy

The Gallop Diocese, which confirmed the rumor of a possible bankruptcy this week, is a sprawling unit, with 53 different parishes spread over an area of more than 55,000 square miles, sources report.

The diocese, according to its own representative is the poorest Catholic region in the country, and it reportedly includes several Native American reservations, according to sources.

And the diocese simply couldn’t contend with the costs of litigation that have come about due to several claims from members of the church that priests engaged in widespread sexual abuse.

Similar claims have plagued Catholic churches across the country in the past few years. In order to deny a potential complaint about the church’s decision, Gallop Bishop James S. Wall denied that the diocese was filing for bankruptcy to “avoid responsibility for what happened or to hide anything.”

On the contrary, Wall said he believed that filing for bankruptcy would be “the best and only way that will allow us to work constructively with all those who suffered from sexual abuse.” He continued by saying that victims of abuse deserved “the church’s respect, compassion, and love,” sources say.

Gallup Join Nine Other Dioceses in Bankruptcy Protection

According to sources, if Gallup does enlist the aid of a local bankruptcy attorney, it would become the ninth U.S. diocese or archdiocese to file for bankruptcy since 2004.

The wave of child abuse cases filed against the Catholic Church has caused a significant amount of financial pain for dioceses across the country.

Sources say litigation over the sex abuse scandal has already cost the Church more than $3 billion in settlements. The scandal first broke in 1992 after a wave of child molestation charges filed against priests in Boston, which unearthed a structural problem with child abuse within the Church. I

n the case of the Gallup Diocese, a spokesperson said the diocese was currently facing between 15 and 20 child abuse lawsuits, some of which date back 50 to 60 years, according to reports.

By taking advantage of bankruptcy’s automatic stay, the diocese will be able to delay litigation of the claims, but it will eventually have to fight most of the lawsuits.

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