Bankruptcy has cost the Archdiocese of Milwaukee more than $12
million in legal fees and other expenses so far, and rejection
of its recovery plan could force it to pay out $13 million more,
its attorneys said in newly filed court documents.
details were revealed in the archdiocese's reorganization plan,
filed late Wednesday night in federal bankruptcy court. The plan
proposes providing $4 million to compensate an estimated 125
victims of clergy sex abuse — less than a fourth of those who
filed claims — while other victims would receive therapy but
no cash payment. That's the smallest per-victim payment yet
offered by the 11 dioceses that have filed for bankruptcy in the
archdiocese filed for bankruptcy in 2011, saying it wouldn't
have enough money if courts ruled in favor of victims who filed
lawsuits. The seemingly stingy sum offered in its reorganization
plan can be partly explained by a long, bitter court fight that
has drained the archdiocese's finances and its relatively unique
organizational structure, which puts much church money out of
In all, the
archdiocese said it has spent $6.9 million on its own attorneys
during bankruptcy. It estimated its creditors' attorney costs,
which bankruptcy rules require the archdiocese to pay, at nearly
$5.6 million. The creditors include hundreds of sexual abuse
victims along with others who are owed money.
filed for bankruptcy after an October 2010 offer to pay $4.6
million to 23 victims was rejected. At the time, it had only
$5.6 million that wasn't earmarked for specific purposes,
according to the court documents.
attorneys had hoped to tap into more than $100 million held in
trust funds and by the archdiocese's 202 parishes. The
archdiocese resisted, however, arguing that it didn't control
that money and had no right to spend it. Courts thus far have
agreed, but not before the archdiocese racked up big legal
One of the
biggest fights has been over a cemetery trust fund established
under New York Cardinal and former Milwaukee Archbishop Timothy
Dolan. A judge ruled that fund off-limits last year, but the
creditors have appealed that decision. That litigation alone
cost nearly $2.5 million, according to court documents.
One factor in
the court's decisions has been that Wisconsin parishes are
incorporated separately from the archdiocese and control their
own money. Parishes in many other states are incorporated as
part of a diocese, allowing it to tap into their assets. One
such example is in Spokane, Wash., where the diocese agreed in
2007 to pay $48 million to about 175 victims, with $10 million
coming from 82 parishes.
archdiocese noted that it has cut costs dramatically in recent
years to come up with money to pay victims. Its budget last year
was $24 million, less than two-thirds of what it was in 2002,
when the national sexual abuse scandal erupted. Most of its
budget comes from donations, fees paid by parishes and schools
and the sale of cemetery plots.
said it keeps about $2 million on hand for cash flow, but
otherwise its savings have been depleted by the sexual abuse
speculated about the value of the religious jewelry and art of
the Archdiocese," its attorneys said in court documents.
"However, the value of the jewelry and art owned by the
Archdiocese is nominal. Liquidation value is estimated to be
archdiocese's headquarters on Lake Michigan was mortgaged to
help pay for a nearly $16.7 million settlement with 10 victims
in 2006. The debt on the property is more than its current
value, according to court documents. Other properties, including
campus ministries in Milwaukee and Whitewater, have little
value, they said.
reorganization plan calls for the archdiocese to put up five
parcels of undeveloped land as collateral for a $2 million loan
from the cemetery trust fund. The money will be used to help
released personnel files last summer for 42 priests with
confirmed allegations of sexual abuse. Victims had pushed hard
to make the documents public. The archdiocese said that effort
cost more than $665,000, mostly due to the need to review the
records and delete information identifying sexual abuse victims.