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Bankruptcy of Catholic Diocese Motivated by Mounting Legal Claims

Last month the Diocese of Gallup, a Roman Catholic diocese with parishes in several New Mexico counties as well as on Indian reservations, filed Chapter 11 bankruptcy in the federal bankruptcy court. Legal claims over sexual abuse by clergy members have overwhelmed the Diocese with potential liabilities causing Bishop James Well to state that bankruptcy, “is the most effective and thoughtful course to take in light of the claims from those who were abused.”

From a purely legal standpoint, this is not any different from when a company gets sued by class action because one of its products caused repeated and widespread harm. Certain asbestos companies were so overwhelmed by numerous legal suits that bankruptcy became the only palatable option. Makers of silicone breast implants were targeted by so many claims for their dangerously leaking products that it became untenable for them to continue without considering bankruptcy. There comes a point where an organization or company recognizes that its legal exposure is much greater than the sum of its assets and potential future gains.

Once bankruptcy is filed those claimants, who have already won a judgment in court and have taken certain steps to secure it, can recover a much greater fraction of their claims than those that have either filed a lawsuit against the diocese or even won a case but have yet to obtain a secured judgment.

In Albuquerque, Giddens & Gatton Law, P.C. has a staff of attorneys who practice primarily in bankruptcy. Giddens & Gatton Law, P.C. offers expert, dependable handling of bankruptcy matters and represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico.  Call (505) 633-6298 to set up an appointment or visit the website at giddenslaw.com for more information.

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