Group added to diocese case

The U.S. trustee has appointed a second creditors’ committee in the Roman Catholic Diocese of Spokane bankruptcy case, reacting to sharp criticism that alleged victims who have pressed sexual-abuse lawsuits were being marginalized.

Wednesday’s development is the latest wrinkle in the bankruptcy, which got off to a troublesome start with allegations that the diocese somehow tampered with the committee established to represent victims in the case.

By appointing two committees – one with five members to represent alleged victims who have filed lawsuits, and one with three members to represent victims who have thus far declined to sue – the case is sure to become more expensive. The diocese not only pays its own legal bills, but also must pay the fees of bankruptcy lawyers representing the creditors’ committees.

Yet the move could calm the discord that has afflicted this Chapter 11 case since it was filed two months ago.

Victims who have filed lawsuits against the diocese were awarded two seats on the original five-member creditors’ committee. The minority representation meant attorneys involved in their lawsuits would have little sway over the committee’s actions.

After weeks of bitter accusations by alleged victims that the diocese tampered with the makeup of the committee, followed by sharp rebukes from diocesan attorneys claiming such fears were part of a baseless conspiracy theory, U.S. trustee Ilene Lashinsky decided to revisit the entire committee structure.

“It’s sad we’ve waited six weeks to get to this point, but now we can get down to business,” said Michael Shea, an alleged victim who was among the two original committee members who have sued the diocese.

“In one sense, it’s a win to the true victims who have claims,” he said. “But it’s also a loss for the people in the pews and victims, because it will cost more money.”

The diocese has approximately $4 million cash on hand.

Diocesan attorney Shaun Cross called the entire episode unfortunate.

“We had hoped that the committee could work together,” he said, when hearing of the decision.

The trustee has broad discretion in naming creditors’ committee members in bankruptcy cases. In this case, however, alleged victims took the unusual step of asking U.S. Bankruptcy Court Judge Patricia Williams to change the committee.

The motion may now be moot.

Now that both victims’ camps have their own creditors’ committees, any concerns can be brought to Williams.

Such an arrangement is different from those in the other Catholic bankruptcies in Portland and Tucson, which each have one main creditors’ committee for victims.