Bankruptcy Pact Pegs $15 Million for Church Sex Abuse Victims

by San Antonio Attorney

A new bankruptcy plan could spell salvation for the struggling Diocese of Stockholm, as negotiations involving approximately $15 million awarded to 27 victims of sexual abuse come to a close. The agreement comes more than two years after the diocese formally filed for bankruptcy, as the legal costs of dealing with child abuse cases became too much for the diocese to bear. If approved, the new settlement plan could enable the diocese to successfully recover from bankruptcy and continue normal operations,

According to Bishop Stephen E. Blaire, the plan was finalized after the diocese reached out and negotiated with dozens of child abuse victims who filed molestation cases against Rev. Oliver O’Grady and Rev. Michael Kelley, who both served in St. Andrew’s Parish in San Andreas. It can be recalled that back in 2012, the Diocese had previously reached a $3.75 million settlement with one of Kelly’s victims. Initial details of the new settlement plan include:

  • A $15 million settlement and a trust fund for all survivors of church-instigated sexual abuse,
  • Settlement of at least 50% of all unsecured debts to various creditors, and
  • A restructuring plan that covers all existing unsecured debts.

Funds will primarily come from the Diocese, as well as insurance companies and other stakeholders linked to the diocese. Sources reveal that the Diocese will provide at least $9.89 million of the total amount required. The victims’ lawyers, insurance companies and representatives of the Diocese agreed that the $15 million settlement should be awarded for the “healing and recovery of all survivors”.

Charges of sexual abuse were filed against Rev. Kelly in 2011, as a 10-year old boy accused the priest of continuously molesting him for two years. The Calaveras County District issued an arrest warrant in 2014 but was withdrawn after the victim died. Sources say that Kelly is now residing in Ireland.

According to Blaire, the $15 million settlement will be allocated for all 27 victims, but $750,000 will be reserved for any future complainants that may come to court. Before this settlement, the diocese had already shelled out millions of dollars for settlement and other litigation-related expenses. The exorbitant costs of litigation depleted the church’s resources and forced them to file for bankruptcy. Stockholm is the 10th diocese in the country to ever file for bankruptcy.

Despite the difficulty, Blaire remains optimistic that the court will approve the new plan.

Leave a Comment

Previous post:

Next post: