Judge approves Duluth diocese settlement of $30 million

The Diocese of Duluth’s final insurance settlement received the stamp of approval from a judge Thursday, putting an end to nearly three years of litigation that has significantly prolonged the organization’s bankruptcy.

Liberty Mutual Insurance Company agreed last month to contribute $6.5 million to victims of child sexual abuse. With four other insurance payments already approved, the settlement agreement brings the sum victims stand to receive to more than $30 million.

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Liberty Mutual Insurance Co. has agreed to pay the Diocese of Duluth $6.5 million for abuse coverage

Liberty Mutual Insurance Co. has agreed to pay the Diocese of Duluth, Minnesota, $6.5 million to settle litigation over insurance coverage for child sexual abuse claims.

A hearing on the settlement is scheduled for March 7 before the U.S. Bankruptcy Court in Minneapolis, according to court papers filed Feb. 5 In re: Diocese of Duluth, Debtor-in-Possession.

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Duluth diocese settles with final insurer

The Diocese of Duluth entered into an agreement this week that would end years of litigation over insurance coverage and provide more than $30 million to victims of child sexual abuse.

Liberty Mutual Insurance Company agreed to pay $6.5 million under a settlement agreement filed this week in U.S. Bankruptcy Court. It is the fifth and final insurer to settle with the diocese, which filed suit in 2016 to force coverage of claims in its ongoing bankruptcy.

A committee representing the claimants must still vote on the proposed settlement. Bankruptcy Judge Robert Kressel is expected to approve the agreement at a March 7 hearing, barring any objection.

But officials said the proposed settlement marks an important milestone in the effort to compensate the 125 people who have filed abuse claims and allow the diocese to emerge from bankruptcy protection after more than three years.

“We hope the bankruptcy judge approves the settlement, which depends in part on whether attorneys for the victims have any objections,” said Deacon Kyle Eller, diocese spokesman. “Although there are additional issues for resolution, settlement with the last insurance carrier would mean significant progress toward final resolution and our goal of providing compensation to those who have been hurt as a result of sexual abuse by clergy in our local church.”

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Duluth Diocese granted extension for bankruptcy reorganization plan

U.S. Bankruptcy Judge Robert Kressel on Thursday approved the diocese's motion to extend the deadline from Sept. 1 to March 17.

The diocese, which is facing 125 abuse claims, filed for Chapter 11 protection in November after being hit with a $4.9 million verdict last November. The judge must sign off on a plan for the diocese to repay its creditors before it can regain control of its finances.

Duluth Trib

MPR: Will sex abuse claims lead more Minn. dioceses to bankruptcy?

Minnesota Catholic Church leaders in St. Cloud, Crookston, New Ulm and Winona are weighing what to do as their dioceses face the financial fallout from hundreds of sex abuse claims between them.

The Archdiocese of St. Paul and Minneapolis and the Diocese of Duluth sought bankruptcy court protection after being overwhelmed by clergy sex abuse claims. Soon, some of the state's smaller dioceses will be forced to choose.

Experts are divided on the path they might take.

"It's unlikely that they're going to bankruptcy, based on national trends," said Charles Zech, director of the Center for Church Management at Villanova University.

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Duluth diocese files for bankruptcy after $8M abuse award

The Catholic Diocese of Duluth filed for Chapter 11 bankruptcy Monday, a month after a victim of priest sex abuse there was awarded $8 million in damages. The diocese was found responsible for $4.8 million.

The northern Minnesota diocese is the 15th diocese in the nation to file for bankruptcy protection after clergy abuse litigation. It follows the Archdiocese of St. Paul and Minneapolis, which declared bankruptcy last January.

Given the "magnitude" of the jury's award, "the diocese was left with no choice but to file for reorganization," the Rev. James Bissonette, diocese vicar general, wrote in a public statement.

"There is sadness in having to proceed in this fashion," wrote Bissonette. "The decision to file today safeguards the limited assets of the diocese and will ensure that the resources of the diocese can be shared justly with all victims, while allowing the day-to-day operation of the work of the church to continue."

The diocese, on its website, notes that the $4.8 million award was greater than its annual operating budget of $3.2 million in the past fiscal year.

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