The Diocese of Gallup has determined that it will file for Chapter 11 reorganization. As many of you know, unfortunately, there are priests and other workers in the Diocese who took advantage of their positions of trust and sexually abused children. As a result, a number of claims have been made against the Diocese for the harm that was caused 40 or 50 years ago. As you also know, the Diocese provides critical services to the Catholic faithful and others in need regardless of their faith and it is important that the Diocese is able to carry on its mission and ministry while at the same time dealing equitably and mercifully with those who have been harmed. The Diocese believes the best way to accomplish these goals is through the filing of the Chapter 11. Below are a list of questions and answers that the Diocese hopes will assist you in understanding the process better and the reasons for the Diocese making this very difficult decision.
Q: What does Chapter 11 or reorganization mean? Doesn’t that really mean bankruptcy?
A: Reorganization is exactly what the name signals. While it is a case that will be filed in the United States Bankruptcy Court, it is a proceeding that allows the Diocese to equitably resolve the claims of those who were harmed by those few workers in the Church who took advantage of their positions and committed acts of sexual abuse. Reorganization allows the Diocese to continue to serve parishioners and members of our community, while at the same time provide ongoing services to the claimants. Reorganization will allow the Diocese to present a plan that pays all the claimants who have been sexually abused on an equitable basis within the limited financial resources of the Diocese. What this means is that anyone with a claim of sexual abuse that is recognized by the court will share in a fund on some type of equitable basis. On the other hand, if these claims are determined through the normal litigation process, it is a race to the courthouse and to collect and when the assets of the Diocese are exhausted (which they will be with the first judgment), there is nothing left for any other claimants. Reorganization also allows the Diocese to address the claims of those who have already come forward, those who were harmed but have not yet come forward and those who may come forward in the future.
Q: Why is the Diocese filing Chapter 11?
A: The Diocese fully realizes its responsibility to heal the hurt of those who were abused. The Diocese also realizes its responsibility to continue the mission that we believe we have received from Jesus Christ: to provide spiritual care, to educate children in the faith, to feed, clothe, and shelter the needy, and to advocate for the least among us. We believe that continuing this mission is essential to our communities and is an expression of our very being as Catholics. Given the financial circumstances of the Diocese, the Diocese has come to the conclusion that the only fair, equitable and merciful way to balance these obligations is by filing a Chapter 11 Reorganization.
Q: Has a Diocese ever filed for reorganization before?
A: Yes. The first Diocese to file was the Archdiocese of Portland in 2004. Since then there have been at least 6 other Dioceses that have filed for reorganization.
Q: Where will the case be filed?
A: The Chapter 11 will be filed in Albuquerque, New Mexico which is where the Bankruptcy Court for New Mexico is located.
Q: How long will the process take?
A: At this early stage there is really no way to tell. A lot will depend on whether all interested parties are able to negotiate a resolution and agree on a plan. If there are a lot of objections to the Diocese’s proposals, the process will likely take longer and be more expensive.
Q: When will the Diocese file its plan?
A: At this point the Diocese does not have an exact date. It is hopeful that when the Chapter 11 is filed, all parties will come together quickly and agree on the terms of a plan. It is the desire of the Diocese to move the process along as quickly as possible while at the same time trying to have a negotiated plan that is acceptable to everyone.
Q: Even though the Diocese does not know exactly what the plan will look like at this point, what is the Diocese hoping to accomplish through this?
A: The Diocese wants to achieve a solution to the increasing number of claims that involves a fair and equitable process for all the claimants. Also, it is important that the Diocese continue to provide other services and healing to those who were harmed as well as be able to carry on the mission of the Church in the Diocese. The Chapter 11 process will allow for that and allow for future claimants to be assured that these services and compensation are available to them as well.
Q: Are the Parishes and Schools part of the filing?
A: No, the Parishes are not part of the filing. The only school that is part of the filing is Gallup Catholic School which is part of the Diocese. The other Catholic schools are either part of a Parish or are not part of the Diocese.
Q: How can we continue to be informed about the Chapter 11?
A: It is our intent to update the website on a regular basis and provide copies of important pleadings on the website. We will also periodically update this Q&A. If you have any questions, you can contact Suzanne Hammons at [email protected]