Spokane bankruptcy plan would separately incorporate each parish

Published: 2005-10-19

SPOKANE, Wash. (CNS) -- The Spokane Diocese proposes to have each of its parishes separately incorporated under a reorganization plan it submitted Oct. 10 to the U.S. Bankruptcy Court in Spokane. As an alternative, it proposes trust agreements declaring that while legal title to parish properties belongs to the diocese "beneficial interest" in those properties belongs to the parishes. In August Judge Patricia Williams ruled that under the current legal structure of the diocese parish properties belong to the diocese itself, for its own beneficial interest, and they are part of the assets subject to the bankruptcy proceedings. The diocese has appealed that ruling and some legal observers believe the case is likely to end up in the U.S. Supreme Court because the stakes -- constitutional and financial -- are so high. The Spokane Diocese, facing millions of dollars in claims from childhood victims of clergy sexual abuse, filed for bankruptcy protection last December.

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