By Scott B. Ehrlich
March 7, 2007
San Diego Union-Tribune Newspaper
[The following is from the second half of the article.
. . . . Is bankruptcy reorganization in the best interests of the victims, the church and its membership, as well as the San Diego community? The answer is unequivocally yes. There are about 150 sexual-abuse lawsuits pending against the church. These lawsuits may languish in the courts for years while the church and the victims stagger along, weighed down by the costs of litigating these lawsuits and the emotional trauma associated with sexual-abuse issues. A Chapter 11 bankruptcy is beneficial in several ways.
First, victims get to participate in the Chapter 11 reorganization process and vote on the plan. A committee of victims will be appointed to represent their interests in the bankruptcy process. Once the plan and a disclosure statement are prepared (under the supervision of the court and creditors' committees), victims will have an opportunity to vote on the plan. If the plan is less speedy or less compensatory than state court tort litigation, the victims can simply vote no.
Second, the bankruptcy process is going to be far less costly for both the church and the victims. The cost of processing all of the claims in one bankruptcy proceeding is going to be far less than the legal costs of 150 individual lawsuits. Both the church and the victims will save stunning amounts of money that would have been paid to lawyers if the cases had remained in the court system.
Third, it is so important that the healing and mending process begin for the victims as soon as possible. Healing can't begin while the economic compensation issues are still pending. By using the bankruptcy system, the process of valuing the claims is shortened and the victims receive their monetary compensation faster. When that part of the process is completed, the victims can move on with the healing process.
Fourth, the church remains a source of sustenance and support to its members and the community. Bankruptcy allows the church to deal with its economic obligations quickly and fully, while continuing to serve its members and the communities of San Diego. By using Chapter 11 bankruptcy, the church can deal responsibly with its economic obligations to the victims while continuing to operate.
Of course, the moral obligations to the victims are not going to be resolved in bankruptcy court— but neither would they be resolved in the 150 lawsuits pending in state court.
[Ehrlich is a professor at California Western School of Law. He specializes in bankruptcy law.
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The complete article . . . .