The Archdiocese of Milwaukee said Wednesday it would set aside $4 million for clergy sexual abuse victims in its bankruptcy reorganization plan and that half the money would be borrowed from a controversial cemetery trust fund.
The archdiocese filed for bankruptcy in 2011, saying pending sexual abuse lawsuits could leave it with debts it couldn't pay. Its creditors include hundreds of people who have filed sexual abuse claims, a fraction of which would be eligible for payments under the reorganization plan.
Eleven Catholic dioceses have filed for bankruptcy in the past decade, and others have set aside much larger sums to compensate victims of sexual abuse. The Milwaukee archdiocese itself agreed in 2006 to a nearly $16.7 million settlement for 10 victims in California who were abused by two of its priests while they were working there. Its total payments to victims before filing to bankruptcy came to $33 million.
Peter Isely, a spokesman for clergy sexual abuse victims, called the offer of $4 million "obscene," noting the archdiocese spent much more on legal fees and paid considerable sums to pedophile priests it was removing from ministry.
"If lawyers are worth so much more to you than survivors, and if priests are worth so much more to you than children who are harmed ... that is an organization that cannot be trusted in its public role," Isely said.
Milwaukee Archbishop Jerome Listecki said Wednesday morning that attorneys would file the bankruptcy reorganization plan later in the day.
Under the plan, the archdiocese would cover victims' therapy for the rest of their lives and provide $4 million to compensate victims and seek additional compensation from insurance companies.
Listecki acknowledged that some might be dismayed by the $4 million offer.
"No amount of money basically is enough to compensate for the loss," he said. "So I think that's first and foremost to realize that."
The archdiocese estimated 125 sexual abuse victims would be eligible for compensation under the plan, which must be approved by a bankruptcy judge. Victims who previously received settlements would not be eligible, nor would people who were abused by someone other than a diocesan priest.
The archdiocese will raise $2 million in a loan from a cemetery trust fund created under New York Cardinal and former Milwaukee Archbishop Timothy Dolan.
The more than $50 million trust fund has been the subject of a long court fight with victims who argue the money should be used to pay them. The archdiocese maintains the money was donated for the care of cemeteries and must be used for that purpose.
A federal judge ruled the trust fund off-limits last year in a decision that has been appealed by the creditors committee, which represents sexual abuse victims as well as others with bankruptcy claims against the archdiocese.
The reorganization plan would end that appeal with a settlement that calls for the archdiocese to receive a $2 million loan using church property as collateral, said Tim Nixon, the attorney for the cemetery trust fund. The loan would be repaid with interest.
Nixon said the settlement would benefit the trust fund by ending costly litigation and ensuring that money from it would not be used for other purposes without repayment.
Jerry Topczewski, Listecki's chief of staff, said the loan amount was based on the amount of property available as collateral, how much the trust fund was willing to lend and the archdiocese's ability to repay the loan.
The other $2 million will come from archdiocese funds not earmarked for other purposes and a settlement with Lloyd's of London, which insured the church in the 1960s and 1970s. Lloyd's agreed last year to buy back its policies, a move that relieves it of liability for sexual abuse claims.
The archdiocese is pursuing similar deals with other former insurers, and some of the $4 million could be used for that litigation. Listecki said it is too soon to say how the money might be divided up. The archdiocese has not outlined how much it hopes to collect from those companies.