WILMINGTON, Del. (AP) — A Delaware bankruptcy judge on Thursday refused to approve the Catholic Diocese of Wilmington's reorganization plan, expressing his opposition to the possibility of what the church calls "sustenance" payments from the diocese to known pedophile priests.
Judge Christopher Sontchi said that in asking him to approve a plan that impairs potential recoveries for victims of priest sex abuse while not impairing the abusers themselves, the diocese had not proposed a plan in good faith, as required under the bankruptcy code.
"I'm not going to confirm a plan unless there is some prohibition on that because I don't think debtor would be operating in good faith," he said.
Sontchi said the diocese's lack of good faith also was demonstrated in its disparate treatment of two law firms representing abuse survivors because of prior court filings in the case that diocese attorneys found offensive. The diocese refused to include the two law firms among the parties that would be exculpated from malpractice or other claims related to their actions in the bankruptcy case unless they agreed to withdraw the offensive pleadings.
Steve Neuberger, an attorney whose law firm was one of the two singled out by the diocese, argued that the court would be violating attorneys' First Amendments rights by agreeing to the diocese's discriminatory treatment.
Sontchi concluded that while the dispute may not touch on the First Amendment, it did reflect the diocese's lack of good faith.
"Either exculpate everybody, or nobody gets exculpated. It's your decision," he told attorneys for the diocese.
The judge's rulings stunned officials for the diocese and their attorneys, who told Sontchi they would need three weeks to determine how to proceed.
Sontchi, however, ordered that the hearing resume in two weeks, on July 28.
Bishop Francis Malooly declined to comment as he left the courtroom.
"I need to kind of think this through," he said.
The judge rejected the diocese's arguments that while the likelihood of sustenance payments was remote, it was a matter of canon law and outside the bankruptcy court's civil jurisdiction. Sontchi noted that the diocese was a civil entity that filed for bankruptcy protection in a secular court and was seeking the civil remedy of having its reorganization plan confirmed.
"I think this issue of allowing future financial payments, however they are characterized, to the priests who have been acknowledged by the diocese to be abusers is an issue not just of economics and not just of technicalities of the bankruptcy code," the judge added. "I think it goes to the very heart of this case."
The diocese, which serves about 230,000 Catholics in Delaware and the Eastern Shore of Maryland, filed for Chapter 11 bankruptcy protection in October 2009 on the eve of the first in a series of trials scheduled in lawsuits filed by alleged victims of priest abuse.
Its proposed reorganization plan centers on a $77.4 million settlement with some 150 alleged victims of priest sex abuse. The Catholic Diocese Foundation, a charitable foundation that is separate from the diocese, would provide about $54 million of that total, with another $15.5 million coming from insurers. In return, the diocese, its parishes and affiliated entities would be released from legal claims related to the church sex abuse scandal. The plan also requires church officials to turn over internal documents detailing how the diocese handled pedophile priests, who in many cases were allowed to continue to prey on children for years after their abuse became known.
Under the plan, two confirmed child abusers, Douglas Dempster and John Sarro, could have their pension payments reinstated, but Malooly testified last week that he is seeking to have the men defrocked, which would make them ineligible for pensions, and that he would amend the diocese's pension plan to exclude known child abusers.
Malooly also testified that he likely would resist any request by church authorities under canon law to provide charity or "sustenance" to known abusers, and that if asked by church authorities to do so, he might have to consider resigning his position.
But attorneys representing the majority of abuse survivors on an ad hoc committee continued to object to the possibility of the diocese making payments to known child abusers.
"It's an affront to the survivors, and it's an indication that there really is no accountability here, there is no remorse for what happened," said Tom Neuberger.
Attorneys for three priests identified by the diocese as child abusers countered that their clients would be prejudiced by any order prohibiting them from seeking such payments.
Patrick Jackson, an attorney for the diocese, said the issue of sustenance payments had been blown out of proportion by attorneys for the abuse victims, an observation that drew a rebuke from Sontchi.
"I would take issue that it got blown out of proportion," said the judge, prompting a later apology by Jackson, who said his remark was based on the amount of money in question.
"We get it. The bishop gets it," Jackson said, referring to the outrage felt by abuse survivors about their tormentors possibly getting financial help from the diocese.Tags: