The Roman Catholic Archdiocese of Boston is likely to declare bankruptcy as a way to grapple with the hundreds of pending lawsuits filed against the church in the crisis involving sexual abuse by members of the clergy, a senior financial adviser to the archdiocese said today.
The archdiocese has been studying the possibility of filing for bankruptcy for months, and The Boston Globe reported today that financial advisers to Cardinal Bernard F. Law unanimously supported the idea because it would be less expensive than continuing to battle the lawsuits in court.
A senior financial adviser, speaking on condition of anonymity, confirmed the report today.
"There are a lot of very, very practical reasons why it makes sense," the adviser said. He said that while Cardinal Law had not yet endorsed the proposal and was unlikely to decide before the end of the year, "he's leaning toward it."
But Roderick MacLeish Jr., a lawyer for the firm Greenberg Traurig, which represents at least half of the plaintiffs, said he believed the archdiocese was trying to pressure plaintiffs lawyers to agree to lesser settlement amounts.
"I think floating this idea out may be part of calculated strategy to say to us, look if you guys don't settle out these cases and back off, then we're going to, for the first time ever, put the archdiocese through bankruptcy," Mr. MacLeish said.
He added: "There is $100 million of potential insurance out there, It's completely premature to consider bankruptcy when the insurance issues have not yet been resolved."
Mr. MacLeish said that bankruptcy would not protect the liabilities of individual defendants in many of the cases, including Cardinal Law and several of his former top aides, who are now bishops elsewhere, and that bankruptcy would hurt the church's ability to raise money.
No diocese in the United States has ever filed for bankruptcy, and the action would probably give the public an impression that the church was acknowledging that it was responsible for mishandling abusive priests by continuing to assign them to parishes without alerting parishioners about their past behavior.
"With some people there's a stigma attached to bankruptcy," the financial adviser said. But he said that after considering the options bankruptcy seemed to be the best choice.
Filing for bankruptcy could allow the church to delay paying plaintiffs for years. A judge would give the archdiocese time to get its finances in order, stopping, for the time being, the progression of pending court cases and the filing of new cases. The release of incriminating church documents in the discovery process would stop, as would depositions of Cardinal Law and other officials.
A federal bankruptcy judge would take the place of Judge Constance M. Sweeney, the Superior Court judge who has been hearing all the cases, who has ruled consistently for the public disclosure of church documents about abusive priests.
In addition, the more than 400 plaintiffs in the pending cases would be subsumed into one group, which would allow for a more uniform formula in settling the cases.
"It would make all the plaintiffs come forward and treat them all equally," the adviser said.
Church lawyers have continued to discuss the possibility of settling the lawsuits without the church having to take such a drastic step as bankruptcy. The most recent meeting occurred last week with about 40 plaintiffs' lawyers and a mediator.
Donna M. Morrissey, a spokeswoman for the archdiocese, said that "no decision has been made with regards to bankruptcy" and that reports suggesting otherwise were "speculative and premature."
"Currently we're in the mediation process, and we plan to continue in that process," Ms. Morrissey said. "Our first priority is to have a fair and equitable settlement for all the victims. We are considering all of our options however."
Like dioceses across the country, the Boston Archdiocese, where the reports of sexual abuse first surfaced, has found itself under intense financial pressure. It is not just a matter of the millions in damages the church may end up paying to the victims. The scandal has led many Catholics to cut back donations.
With more than 400 actions pending against it, the Boston Archdiocese's ultimate financial liability could be tremendous — by some estimates, more than $100 million. In September, the archdiocese paid $10 million to settle with 86 plaintiffs.