Going broke by going bankrupt

Q. Which of you wishing to go through Chapter 11 does not first sit down and calculate the cost to see if there is enough for its completion? Otherwise, after filing and finding itself unable to finish the work the onlookers should laugh at it and say, 'This one began to reorganize but did not have the resources to finish.'

A. Milwaukee Archdiocese says it's going broke, Annysa Johnson reported in the Milwaukee Journal Sentinel.

"'We've used all the money we had from savings, reserves, investment earnings and money budgeted for litigation,' archdiocese spokesman Jerry Topczewski said.

"'This is a reorganization, not a liquidation,' he said... ."

Looks like it was intended to be a reorganization, but our Archdiocese has pretty much liquidated itself, instead. It filed a motion to suspend payment of some of the ongoing expenses of the bankruptcy.

"James Stang, lead attorney for the bankruptcy creditors committee, ...blamed the cost of the bankruptcy - nearly $9 million in fees paid to date - on the archdiocese's aggressive efforts to throw out hundreds of sex abuse claims.

"'The archdiocese has spent a fortune trying to throw out these claims,' Stang said. 'No one (among other church bankruptcies) has used its resources to object to claims the way this diocese has,' he said."

I don't recall seeing our Archdiocese directly respond to this criticism of its litigation strategy by pointing out other diocesan bankruptcies that used it.

"Topczewski casts the blame on the creditors' attorneys, saying they've pursued frivolous actions, including trying to get money out of parishes."

If he breaks down the $9 million cost to date, we can evaluate his assertion. (Though given our Archdiocese's position was that the parishes were separate corporate entities, shouldn't the expense of litigating that issue have largely been the parishes'?)

'Also Thursday, [U.S. Bankruptcy Judge Susan V.] Kelley signaled that she is open to revisiting the confidentiality order she issued early in the case to allow some content to be made public, including information on abusive priests and depositions of Archbishop Rembert Weakland and Bishop Richard Sklba - both now retired - who together handled the archdiocese's sex abuse cases for decades.'

At this point our Archdiocese's internal memos and correspondence with counsel on strategy might be even more interesting, though I don't expect we'll ever see those.