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Central California diocese files for bankruptcy

STOCKTON, Calif. (AP) -- A central California Roman Catholic diocese has declared bankruptcy after paying out millions of dollars to plaintiffs in sexual abuse allegations over the past two decades.

The Diocese of Stockton, which filed for Chapter 11 bankruptcy protection Wednesday in U.S. Bankruptcy Court in Sacramento, serves an ethnically diverse population of about 250,000 Catholics in a region spanning more than 10,000 square miles. It has paid more than $14 million in settlements and judgments to victims of sexual abuse, and its insurance providers have paid an additional $18 million.

“We have, over 20 years, tried to address every sexual abuse allegation that has come forward,” said Bishop Stephen E. Blaire, who leads the diocese.

“While it's painful and difficult” to declare bankruptcy, he told The Associated Press, “I think it's the right thing to do,” and “it will allow us to continue our work as a church.”

The diocese's attorney, Steven Felderstein, said it had roughly $17 million in outstanding debts and that its legal fees for the bankruptcy easily could be $1 million or more.

“The diocese would be responsible for not only its attorneys' fees but for the creditors' committee's attorneys' fees,” Felderstein said.

There are also four outstanding sexual abuse cases. Because the diocese is running so low on cash, it's not in a position to settle those claims, let alone claims of victims who might come forward in the future, Blaire told the AP.

Payouts for sexual abuse plaintiffs often are upward of $1.5 million, Blaire said, and a recent one was more than $3 million.

“We just don't have that kind of money anymore,” he said, adding the diocese has less than $1 million in its reserve fund. He said the bankruptcy is the only way to be fair to current and future victims.

Felderstein said that because of the filing, a deadline eventually will be set for additional abuse claims.

In the meantime, Felderstein said he soon will be filing motions with the court to request the authority to make payroll for any wages incurred before the filing; to ask to continue using the diocese's current cash-management system; and to order utility companies to keep services on.

“We are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse,” Blaire noted in a statement. “We can never forget that these evil acts, not the victims of the abuse, are responsible for the financial difficulties we now face.”

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