Catholic Diocese of Wilmington Spent $15.8 Million in Bankruptcy Fees

by San Antonio Attorney

The cost of Delaware’s Catholic Diocese of Wilmington’s bankruptcy case was $15.8 million in attorneys’ fees and other expenditures, based on documents filed in the U.S. Bankruptcy Court this week. The case was filed in 2009 while it faced lawsuits charging former priest Francis DeLuca’s of sexual abuse. The diocese emerged from bankruptcy in 2011 after a $77 million settlement.

Attorneys’ fees and expenses was $12.3 million of the $15.8 million total expenses, with the remaining paid to financial advisers, a pension specialist, accountants, consultants, and the U.S. Trustee. Pachulski Stang Ziehl & Jones, the lawyers representing the victims were paid about $4.9 million in total, while lawyers representing lay workers in the pension matter got less than $1 million.

There are 152 claimants and 99 of them are alleged victims represented by Wilmington attorney Tom Neuberger. According to him, the costs were excessive and could have been prevented if the diocese had settled in good faith.

Wilmington is one of about a dozen dioceses nationwide that declared bankruptcy. At the time of the filing, the Wilmington was the seventh Catholic diocese in the U.S. to file for bankruptcy after the church abuse scandal exploded seven years ago which started in the Archdiocese of Boston. The Catholic Diocese of Wilmington covers also covers part of Maryland and serves about 230,000 members.

The diocese filed for Chapter 11 protection in Oct. 2009, just before eight hearings were to start – all in connection of the former priest’s misconduct. Mediation was unsuccessful.

Chapter 11 is generally the most costly form of bankruptcy in the U.S. However, it is also the only bankruptcy option for debtors who want to restructure but owe far too much to qualify for a Chapter 13 filing.

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