c. 2006 Religion News Service

EUGENE, Ore. _ The Archdiocese of Portland is likely to emerge from nearly three years of bankruptcy and return to normal operations next spring, according to a deal announced Monday (Dec. 11) by mediators.

The amount of the settlement won’t be made public immediately, but insurers for the archdiocese will chip in more than $50 million toward the cost to resolve priest sex abuse claims, said U.S. District Judge Michael Hogan, one of two mediators.

Nearly 150 cases have been settled during more than three months of mediation; about 20 cases remain unresolved. Hogan expressed confidence that most of the remaining claimants would settle, but said anyone who did not agree to deals would have the right to a jury trial.

Although Hogan would not discuss financial details, he said the settlement would not include using schools and parishes as collateral. The settlement also includes a fund for accusers who come forward in the future.

The new plan, scheduled to be submitted before Christmas, must be approved by the U.S. Bankruptcy Court as well as a majority of the creditors.

In the meantime, Hogan kept his gag order in place to prevent anyone involved in the bankruptcy, including attorneys, parishioners and accusers, from discussing the case until the settlement has been secured.

“We are not going to undermine all this good work that has been done,” Hogan said.

Erin K. Olson, an attorney representing more than two dozen priest accusers, took legal action Monday to undo the gag order. In a motion before the 9th U.S. Circuit Court of Appeals, Olson said the gag order violated the free speech rights of her clients.

The Portland Archdiocese settled more than 150 claims for $56 million before filing for bankruptcy protection in July 2004. But lawsuits continued to mount. And on the morning a case seeking $135 million was scheduled to go to trial, Portland became the first archdiocese in the United States to seek bankruptcy protection from priest sex abuse litigation.

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The bankruptcy process is designed to give debtors and creditors time to reach a compromise, but from the beginning the archdiocese and the priest accusers were far apart.

A big dispute was the value of the archdiocese. Accusers said archdiocesan assets were worth more than $500 million _ more than $100 million in cash and investments and $400 million in real estate. But the archdiocese said that under canon law, it merely held the assets for the true owners: its 124 parishes throughout western Oregon.

U.S. Bankruptcy Judge Elizabeth L. Perris largely ruled in favor of the accusers, saying the parishes and the archdiocese were legally one and the same. Perris said the archdiocese was the true owner of 10 test properties chosen by the church; the archdiocese appealed.

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The settlement appears to settle the dispute by relying on funds, real estate and revenue sources clearly controlled by the archdiocese. Most financial details have yet to be disclosed.

The deal comes on the heels of several large settlements, most recently a $60 million agreement between the Archdiocese of Los Angeles and 45 sex abuse claimants announced Dec. 1.

Other large settlements include $100 million paid to 87 claimants last year by the Diocese of Orange in Orange County, Calif., and $85 million paid to 552 claimants in 2003 by the Archdiocese of Boston.

Though none of those dioceses sought bankruptcy protection, Portland’s lead was followed by the dioceses of Tucson, Ariz.; Spokane, Wash.; and Davenport, Iowa. Tucson’s diocese entered bankruptcy with a ready-made reorganization plan and quickly settled with creditors. Spokane and Davenport remain in bankruptcy.

(Ashbel S. Green and Steve Woodward write for The Oregonian in Portland, Ore.)

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