Parish-Diocese Relationship At Issue In Bankruptcy Proceedings

Today Law.com reports on the difficult bankruptcy law issues posed in proceedings against the Catholic diocese of Spokane, Washington. Pushed into bankruptcy by priest sex-abuse law suits against it, the diocese claims that churches and schools held in trust by the diocese for individual parishes should not be part of the assets that diocese creditors can reach. The diocese argues that civil courts must defer to church law which recognizes individual parishes as separate legal entities. Attorneys for creditors argue that canon law should not govern rights of outsiders to reach property in a bankruptcy proceeding. A hearing is set for June 27 on the issue.