Gallup diocese bankruptcy case closed, $17.6 million paid to claimants

Elizabeth Hardin-Burrola

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Gallup Independent

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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 insurance companies. 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.

[This story was published first in the Gallup Independent, Gallup, N.M. Used with permission.]

Background and stories related to Gallup diocese's bankruptcy case and clergy sex abuse cases. 

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