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Church confirms bankruptcy option

By Michael Rezendes and Stephen Kurkjian, Globe Staff, 8/3/2002

he Archdiocese of Boston yesterday confirmed day that its lawyers are studying the implications of filing for bankruptcy as a means of continuing operations while making a ''fair and equitable settlement'' in all clergy sexual abuse cases.

''It is true that in the process of considering all possible options in pursuit of a global settlement, legal counsel has been authorized to review how bankruptcy law might apply to the archdiocese,'' said Chancellor David W. Smith.

Smith's statement, delivered during an afternoon news conference, followed a report in the Globe yesterday that said archdiocesan attorneys have consulted with Daniel M. Glosband, one of the city's top bankruptcy lawyers.

Although no decision on bankruptcy has been made, church advisers said the archdiocese has begun to explore that possibility in the event that it is hit with large judgements in the more than 400 clergy sexual abuse claims that have been filed with the archdiocese since January.

One adviser, who asked not to be identified, said bankruptcy was being considered as ''a worst-case scenario.'' Yesterday afternoon, at a news conference at the chancery in Brighton, Smith read a brief statement on the issue and refused to take questions from reporters.

Analysts said that filing for bankruptcy would provide some positive legal and financial benefits for the archdiocese, including the assurance that its millions of dollars worth of real estate in Greater Boston could not be sold in order to pay settlements.

If the archdiocese were to file for bankruptcy, it would be the first in the nation to do so.

Lawyers for clergy sexual abuse victims, while agreeing that the archdiocese may be in serious financial straits, said they believe the church has the financial means to pay sexual abuse claims without filing for bankruptcy.

Jeffrey A. Newman, an attorney with the firm of Greenberg Traurig, which represents about 200 alleged victims, said he has reviewed confidential archdiocesan financial records that show the church has more than $100 million worth of insurance coverage available to pay outstanding claims.

Newman also said that he and other lawyers for alleged victims have assured the archdiocese that they would not try to force it to sell schools, churches, or other real estate used in ''essential functions of the church.''

Robert A. Sherman, a lawyer with Greenberg Traurig, said that yesterday the firm heard from about 100 of the alleged victims with questions about how a bankruptcy filing by the archdiocese would affect their claims.

''The archdiocese's lawyers are mistaken if they think that by threatening bankruptcy, these victims would be willing to lessen their resolve and lower their sights'' by accepting smaller settlements, Sherman said.

This story ran on page A8 of the Boston Globe on 8/3/2002.
© Copyright 2002 Globe Newspaper Company.