Judge to rule on financial holdings

Monday marks perhaps the most significant action to date in the Roman Catholic Diocese of Spokane’s bankruptcy case.

U.S. Bankruptcy Court Judge Patricia Williams will hear arguments that could fold Catholic parish properties across Eastern Washington into the financial holdings of the diocese.

Claimants in the bankruptcy case – the alleged victims of priest sexual abuse – believe the diocese is withholding valuable parish assets from its books, including church buildings, equipment and cash.

The diocese has argued that parishes are separate entities and that their assets are merely held in trust by the bishop – not owned.

Williams’ ruling on the matter could affect how the U.S. Roman Catholic Church handles abuse claims nationwide.

Should the judge rule, which could happen as early as mid-July, her decision is likely to be appealed.

But Judge Williams also could determine that such a decision needs full vetting before a jury and put the case on a trial schedule.

Regardless, many involved in the diocese bankruptcy say the hearing Monday ultimately could force meaningful settlement talks.

It has been estimated that the diocese and its insurance companies have perhaps as much as $25 million available to compensate victims. That may not be enough, however, and attorneys involved with the case have said privately that they expect parishes will have to come up with about that much money by selling or mortgaging properties to move past the priest abuse scandal.

Few involved with the case expect the diocese to be liquidated – its assets sold as commercial real estate and its ministry emptied of financial support – as might be the outcome in a corporate bankruptcy.