Santa Fe archdiocese to seek bankruptcy protection

Copyright © 2018 Albuquerque Journal

John C. Wester, Archbishop of Santa Fe, announced the diocese would file for bankruptcy protection after a string of lawsuits claiming clergy abuse years ago. (Jim Thompson/Albuquerque Journal)

After more than two decades of scandal and millions of dollars in payouts to victims of priest sexual abuse, the Archdiocese of Santa Fe on Thursday announced its plan to stanch its financial losses by filing for Chapter 11 reorganization.

Archbishop of Santa Fe John C. Wester, who appeared at a news conference at the Catholic Center in Albuquerque, said he had been contemplating filing for bankruptcy protection for a few years, but now the archdiocese is facing up to 40 active claims from alleged victims who claimed they were sexually abused by priests in the archdiocese.

“We could see where this was all leading and the trajectory wasn’t changing. We just don’t have any money,” Wester said. “If we’re not here, we can’t help anybody.”

The archdiocese would join 19 other Catholic diocese organizations nationwide that have filed for bankruptcy protection. Nearly two years ago, the Diocese of Gallup, which covers parts of western New Mexico and eastern Arizona, concluded its Chapter 11 reorganization case in which more than $17.6 million was paid to claimants after more than three years of litigation and mediation.

Catholic priests serving in the Archdiocese of Santa Fe make their way to a mandatory meeting in Albuquerque on Thursday at the St. Pius X High School auditorium, where they learned of the archdiocese’s plans to file for Chapter 11 bankruptcy protection. (Roberto E. Rosales/Albuquerque Journal)

The Santa Fe archdiocese bankruptcy action would set aside money for current and future victims. Claimants would have an active role in the process, said Ford Elsaesser, a Sandpoint, Idaho, bankruptcy attorney retained by the archdiocese.

Wester’s announcement came hours after he held a meeting to inform priests in the archdiocese who had been summoned to Albuquerque Thursday.

The legal action isn’t being pursued to “avoid responsibility,” the archdiocese contended.

“For me, one of the real points that clinched this decision for me,” Wester said, “is that this is an equitable way to assist all victims and not to leave anybody out.”

Wester’s announcement comes after a new wave of civil lawsuits alleging clergy child sexual abuse has hit the archdiocese this year, and a former high-profile pastor who served at several Albuquerque parishes, Arthur Perrault, is facing federal criminal charges involving a former altar boy in the early 1990s.

Moreover, the state Attorney General’s Office is actively investigating at least two former priests and just this week executed a search warrant on archdiocesan offices in Albuquerque to try to collect more than 50 kinds of records.

Albuquerque attorney Brad D. Hall, whose law firm has represented more than 100 victims of clergy sexual abuse in the past five years, lauded the decision by the archdiocese.

“We believe that all survivors of clergy sexual abuse in New Mexico will be helped in the Bankruptcy System to obtain closure and transparency,” Hall said in a press release. “The Archdiocese of Santa Fe has always been one of the epicenters of the clergy sexual abuse crisis in the United States. With the filing of the bankruptcy, the Archdiocese of Santa Fe can fully address the scope of the priest abuse crisis in a meaningful way.”

Wester estimated that “millions of dollars” in claims have been paid by the archdiocese, through its insurance carriers and from reserve funds.

“We’re not a rich church, it’s not a wealthy archdiocese. The churches, the parishes, the schools are going forward in their own way. The cases we’ve mediated and compensated have come from our reserves.”

Elsaesser said the archdiocese cannot predict how many victims will come forward in the future, but through the bankruptcy process, claimants will be asked to come forward.

“Once those claims have been filed so we know what the universe of claims are, we anticipate going into mediation with all plaintiffs to try to reach a global resolution of all claims,” Elsaesser said.

He said a fund for future claims will also be established for those who “might connect the dots, so to speak, or have repressed memory and assert a claim in 2020 after the case is, hopefully, concluded.”

The bankruptcy action won’t save the archdiocese money, Wester said.

“We’re not saving anything. Whatever the money (is that) has to be paid to those people is going to be paid.”

But instead of paying current claims, and having no money to pay future victims, “now those who are already here will I suppose get less, but that everyone will get something,” Wester said.

Wester, who has served as archbishop in New Mexico since June 2015, said the decision to file for bankruptcy wasn’t easy.

“Initially it was kind of fear and foreboding … no bishop wants to declare bankruptcy. I have to say I’m at peace. I think this is the right decision and has the most promising outcome for everybody.

“I don’t mean this as a sound bite, but victims come first. I deeply apologize for the pain that they’ve experienced, and the church wishes to reach out to them in any way we can. This certainly is a very important way to offer financial compensation.”

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