Bankruptcy can occur in any business industry. It can affect people and entities from all areas of life, secular or religious. It is especially devastating when it represents a group or business that is a respected role model in society.

Milwaukee’s archdiocese is back in the news, after having filed for bankruptcy just over three years ago. It recently released sensitive documents that had been hidden from public view for years. The papers contained damaging information regarding how the church dealt with allegations of child abuse involving priests. The story made the news because the creditors, including victims, in the bankruptcy case allege that the archbishop of Milwaukee had announced those guilty of abuse would leave the priesthood, and they would move millions of dollars into a cemetery fund to protect itself from any financial liability.

The Milwaukee Archdiocese had filed for Chapter 11 in efforts to address over 550 claims from men and women who claimed they were victims of child abuse at the hands of teachers, deacons, teachers and priests over the last couple of decades. There are already more than a dozen civil fraud lawsuits over how they have handled these abuse cases.

The disclosures by the archdiocese come packaged with a “reorganization” plan that is attempting to make insurers and creditors happy enough to approve the reorganization.

Committees representing creditors and insurers are not pleased with the proposal, calling it “inadequate.”

The plan purports to settle all litigation in the case, including a first amendment issue and also proposes to protect parishes and charities from further litigation.

Creditors maintain the bankruptcy and reorganization plan are part of an “asset protection” scheme to transfer the mess of abuse claims to federal court, where it could plead religious freedom. They claim they have a legal right to archdiocese assets, including the cemetery funds, other properties and financial revenues.

In troubling economic times, bankruptcy can happen to any individual or business. It is sometimes hard to grasp when the entity is a trusted corporation. While the case in Milwaukee is extreme, filing Chapter 11 is an issue fraught with emotion and anguish, along with a sad story. Anyone who is facing business bankruptcy should seek help from someone with a strong background in the field so as to make sure a fair solution is achieved.

Source: Milwaukee-Wisconsin Journal Sentinel, “Abuse victims call Archdiocesan bankruptcy plan ‘repugnant’” Annysa Johnson, Apr. 04, 2014