Diocese of New Ulm files for bankruptcy amidst sex abuse lawsuit

The Diocese of New Ulm announced plans Friday to file for Chapter 11 bankruptcy protection, becoming the third diocese in Minnesota and 14th nationwide to take the action. The decision comes after more than 100 victims filed lawsuits against the Diocese of New Ulm, alleging sexual abuse by clergy members.

"I have come to the conclusion that financial reorganization is the fairest way to compensate victims and survivors of sexual abuse,” said Bishop John LeVoir, in a video statement on the diocese’s website.

LeVoir said the filing should not lead to the closure of any parishes or schools in the diocese, which serves 15 counties in southern and west central Minnesota.

The suits were filed under a state law that opened a three-year window for victims of past abuse to file claims. Last year, the Dicoese of New Ulm released the name of 16 priests credibly accused of sexually abusing dozens of children.

The bankruptcy filing was not unexpected by attorneys representing the survivors.

“What this does is it groups all of the cases together, with one judge and one court instead of having a whole bunch of different cases going on at one time,” said Mike Finnegan, with Jeff Anderson and Associates. The law firm is handing 90 of the cases against the Diocese of New Ulm.

The Archdiocese of St. Paul and Minneapolis and the Diocese of Duluth both filed for bankruptcy protection in 2015. Finnegan said the demands of insurance companies and a desire to have a centralized process for claims are factors driving the bankruptcy filings.

“Even though the Diocese of New Ulm had insurance going all the way back to its start back in the late 1950s, those insurance companies are now saying 'we're not going to pay,’" Finnegan said.  “And so, they're really forcing the diocese’s hand, so that's one reason, really big reason why it's happening.”

The proceedings for both the Archdiocese of St. Paul and the Diocese of Duluth are making their way through bankruptcy court. All of the previous bankruptcies outside of Minnesota have led to compensation for victims of abuse, Finnegan said.