Nienstedt: Bankruptcy best path for clergy sex abuse claims

Updated 6:00 p.m. | Posted 9:35 a.m.

With three clergy abuse lawsuits nearing trial and concerns mounting over the cost of future claims, the Archdiocese of St. Paul and Minneapolis on Friday filed for bankruptcy protection.

The Chapter 11 filing buys the archdiocese time to reorganize its troubled finances as it faces huge potential costs tied to clergy sex abuse. Instead of handling claims through civil suits, alleged victims will likely need to file claims in federal court as creditors of the archdiocese.

The shift into bankruptcy court also stops the coming civil trials, which were set to begin Jan. 26.

The move allows the "finite resources" of the archdiocese to go equitably to clergy abuse victims while letting the institution continue its mission, Archbishop John Nienstedt said at an afternoon press conference.

The archdiocese reported assets of $10 million to $50 million — and liabilities of $50 million to $100 million.

Ultimately, the archdiocese may have to sell some assets to pay its debts, Nienstedt said.

He added that he does not intend to resign.

"I love this archdiocese. I think I have worked hard on behalf of the archdiocese," he told reporters.

Watch the press conference

Church leaders had been signaling bankruptcy for months as the financial woes of the archdiocese deepened. Last fall, the chancery's outside accountants cast "substantial doubt" about its long term financial health given that future clergy abuse costs were impossible to predict.

In November, archdiocese chief financial officer Thomas Mertens called bankruptcy protection "a way to respond to all victims/survivors by allowing the available funds to be equitably distributed to all who have made claims..."

Still, it was a stunning step Friday for one of the Twin Cities oldest, largest and most influential institutions, one that traces its roots to the 1840s and now shepherds more than 800,000 Catholics and 400 priests in nearly 200 parishes.

The bankruptcy filing comes 16 months after MPR News first published reports that showed an ongoing cover-up of clergy sex abuse by Nienstedt and other top officials. The MPR News investigation plunged the archdiocese into a clergy sex abuse scandal. Within days of the first MPR News report, Nienstedt's top deputy, the Rev. Peter Laird, resigned. As the scandal widened, the archdiocese postponed a $160 million capital campaign, and parishioners' calls for Nienstedt's resignation grew louder.

The Twin Cities archdiocese becomes the 12th in the nation to seek bankruptcy protection.