MELISSA BLOCK, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

In Portland, Oregon, a federal bankruptcy court judge has handed that city's Catholic archdiocese a major legal setback. The judge ruled today that the archdiocese is the legal owner of 124 Catholic parishes in western Oregon, and that means that those parish assets are now vulnerable as the archdiocese faces massive lawsuits from men and women who have been sexually abused by priests. Reporter Colin Fogarty from Oregon Public Broadcasting covered today's ruling and joins us now.

And, Colin, the Portland Archdiocese was the first in the country to declare bankruptcy after the sex abuse scandal broke. And tell us why the ownership of these parishes is so important.

COLIN FOGARTY reporting:

Well, it gets at the size of the estate of the archdiocese, essentially how much money is available to pay off these claims and how much money is available to get the archdiocese out of bankruptcy. The church has offered $42 million so far of, you know, cash in hand, a line of credit from a few lenders. With this ruling, the estate of the archdiocese is now worth 5 or $600 million, and that's in property and cash. There's a cathedral downtown. All of that is subject now to possible liquidation.

SIEGEL: But does that mean that a cathedral or altars from churches are headed for the auction block?

FOGARTY: No, it's--that's not very likely. I mean, it sounds very dangerous for parishes, and it is; they are subject to liquidation. But the attorneys in the case say that that's probably not likely in a practical matter; that the lawsuits are not worth 5 or $600 million. We're talking more like tens of millions of dollars rather than hundreds of millions of dollars.

SIEGEL: What does this mean for other dioceses that might face similar lawsuits?

FOGARTY: Well, it makes bankruptcy, the option of bankruptcy, a lot more difficult. And remember Portland has been seen as a test case for bankruptcy court for dioceses and archdioceses across the country dealing with the same sex abuse scandal. And also, you know, it gets at the power of the court, the bankruptcy court, the federal court, over a Catholic church. Now remember the church attorneys in this case said that because of church governance, because the canon law says that parishes are separate from the archdiocese and they are stand-alone entities, that that means that it would be a violation of the First Amendment and the Religious Freedom Restoration Act if a judge were in this case to say that parishes are subject to liquidation. The judge now has said that the question of who owns the property is quite simply not a matter of theology, and that has ramifications for every diocese across the country.

SIEGEL: The archdiocese was arguing that, in effect, each parish had limited liability. You couldn't collect more than its own property.

FOGARTY: Exactly. The analogy I like to use is that--is the church more like McDonald's, where you have...

SIEGEL: Franchises.

FOGARTY: ...franchises, vs. Wal-Mart, where you have a stand-alone corporation run by one central office?

SIEGEL: Well, Colin, briefly, what happens next to this case?

FOGARTY: Well, the attorneys on both sides or multiple sides still have to negotiate some kind of settlement to the case. And attorneys for the plaintiffs, at least, the sex abuse victims, believe that this ruling will make that process go a lot faster because the size of the estate is now known.

SIEGEL: Thank you, Colin Fogarty of Oregon Public Broadcasting.

FOGARTY: Thank you.

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