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$21 million settlement announced in Diocese of Gallup bankruptcy

ALBUQUERQUE, N.M. — Attorneys in the Diocese of Gallup Chapter 11 bankruptcy filed a reorganization plan today that contains cash contributions of $21 million from 11 funding sources to settle claims filed by 57 alleged victims of clerical sexual abuse.

The settlement also will be used to establish a trust to pay for future claims filed against the diocese.

And it will pay legal and professional costs in the 28-month-old case that have totaled more than $3.5 million. The two primary law firms in the case have agreed to a $416,000 reduction in fees, the lead attorney for the diocese, Susan Boswell of Phoenix, told a judge on Monday.

Boswell outlined major features of the reorganization plan for U.S. Bankruptcy Judge David T. Thuma of Albuquerque at a hearing this morning.

The reorganization plan and other details of the settlement agreement will be considered by Thuma at a hearing scheduled next month. The plan also must be approved by members of a committee representing claimants in the case.

James Stang, a Los Angles attorney representing the claimants’ committee, said “non-monetary” terms of the settlement remain under negotiation. Those terms often include issues such as records disclosures, apologies, and diocesan policies to protect children.

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