New Ulm Diocese in southern Minnesota files for bankruptcy

Another Minnesota Catholic diocese has filed for bankruptcy reorganization, as it faces scores of clergy sex abuse lawsuits.

New Ulm became the third Minnesota diocese, and the 14th nationwide, to enter bankruptcy, listing alleged abuse victims as its greatest unsecured creditors.

Potential settlements of abuse claims could exceed the ability of the diocese to pay. In bankruptcy, the church can try to reorganize its operations and finances and develop a compensation plan for abuse survivors.

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Explore the full investigation Clergy abuse, cover-up and crisis in the Twin Cities Catholic church

"We've expected it for a while. Insurance companies have been playing hard ball throughout and forced at least the diocese New Ulm's hand to go into bankruptcy," said Mike Finnegan, an attorney with the law firm that represents most of about 100 people who have filed abuse claims.

The diocese has settled three claims confidentially, with insurers making significant financial contributions. But Finnegan said church insurers are trying to avoid making payments in other cases.

In March 2016, the diocese agreed to release the names of 16 priests with credible allegations of child sexual abuse.

The diocese claims a Catholic population of about 54,000, along with 75 parishes and 37 active priests.

The Twin Cites archdiocese and Duluth diocese previously field for bankruptcy.