After more than three years in bankruptcy court, the Diocese of Gallup, N.M., received a final decree last week to close its Chapter 11 reorganization case.
U.S. Bankruptcy Judge David T. Thuma issued the final decree and
order Jan. 31, but he made the effective date Dec. 13, the date
attorneys for the diocese filed a motion requesting the final decree.
The Gallup Diocese filed its Chapter 11 petition Nov. 12, 2013, after
being named as a defendant in a dozen pending clergy sexual abuse
lawsuits and an undisclosed number of out-of-court claims.
The church bankruptcy case eventually involved dozens of attorneys
who represented a myriad of interests: the Gallup diocese, clergy sex
abuse claimants, other Catholic dioceses and entities, and a number of
After more than 30 months in court, three mediation
sessions, and the services of two mediators, a plan of reorganization
was confirmed by Thuma in June 2016.
Under the provisions of the settlement agreement and plan of
reorganization, more than $17.6 million was paid to compensate clergy
sex abuse claimants, according to a post-confirmation report filed with
the court Nov. 8, 2016.
According to court documents, 57 abuse claims
were filed in the case; however, the specific number of claims that were
approved or rejected was not publicly disclosed.
Although the Diocese of Gallup's bankruptcy case is now closed, a
related sex abuse lawsuit against the Sisters of the Blessed Sacrament
and St. Michael Indian School will move forward in Arizona's Coconino
County Superior Court.
The Sisters and their school failed to become
protected parties in the bankruptcy case because they did not join the
mediation process and make a financial contribution to the Gallup
Diocese's settlement agreement.
In a separate action Jan. 31, Thuma issued another order that
provides guidelines to the Arizona court regarding the Sisters'
liability issues under the Diocese of Gallup's plan of reorganization in
U.S. Bankruptcy Court.