SNAP lawyers hopeful they can shut down Milwaukee parishes

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Creditors in the Milwaukee bankruptcy are almost certain to challenge the archdiocese's assertion that parish assets are off-limits because parishes are separately incorporated. The first salvo came in the line of questioning by victims' attorney James Stang in a hearing Wednesday. Stang questioned John Marek, the archdiocese's chief financial officer, about parish corporation boards, which includes the archbishop and his vicar general.

Both Stang and archdiocese attorney Bruce Arnold declined to be interviewed for this article.

Legal experts said bankruptcy courts have respected the autonomy of parishes in Davenport and Wilmington, where they are separately incorporated.

But some trusts have not been ironclad.

Trust structures were contested in Portland, Spokane and Wilmington. In Wilmington, the court ruled that millions of dollars in an investment trust held by the diocese for parishes, schools, cemeteries and other organizations would become part of the estate because they had been commingled with diocesan funds and couldn't be traced to their original sources - a decision that is now affecting pensions for lay employees.
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In the end, bankruptcy can clear the slate and give an archdiocese some level of certainty about its financial obligations. However, there are risks, including the potential loss of operational control, and the possibility that the negotiated settlement could be greater than it initially expected.

"It's a gamble," said Zech. "The last thing a diocese wants is for outsiders to control their decisions, and they're careful not to go there."

Across the country, dioceses have had to sell or mortgage properties, cut programs, and ask or compel parishes and the faithful to help shoulder the cost of settlements.

"They're mortgaging their futures," Chopko said, "and cutting back on ministries that are vital to the growth and future of the dioceses."

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Also check out Terry's analysis on the US Judge stating the archdiocese is being "disingenuous."