A year into bankruptcy, legal bills are continuing to mount for the Diocese of Duluth.
U.S. Bankruptcy Judge Robert Kressel on Thursday approved the spending of another $750,000 in attorneys' fees and expenses - swelling the total cost of the process to $1.28 million and counting.
The biggest chunk of the money has gone to four law firms representing the diocese, but more than $183,000 also has been paid out to attorneys for a creditors' committee, which represents people who have filed child sexual abuse claims against the diocese.
While in bankruptcy protection, the diocese's expenses must be submitted to and approved by a judge. The order issued Thursday covers attorney compensation through October.
The diocese filed for Chapter 11 bankruptcy protection on Dec. 7, 2015, in wake of a $4.9 million verdict in the first case to go to trial under the Minnesota Child Victims Act, which temporarily lifted the statute of limitations for victims of decades-old abuse cases to file suit.
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A diocese official testified at a February hearing that the diocese typically breaks even on an annual budget that is based on operating revenues of about $3.5 million. The diocese has reported debts of approximately $12 million, far exceeding its reported assets of about $5 million.
Sexual abuse claims were filed in the bankruptcy process by 125 people ahead of a May 25 deadline.
The diocese and the creditors' committee have held several mediation sessions with Gregg Zive, a federal bankruptcy judge in Nevada with experience mediating diocesan bankruptcy cases. Both sides have expressed a desire to reach a settlement, as has been the case in previous diocesan and religious order bankruptcies.
The diocese in June filed a federal lawsuit against five insurers - a measure supported by victims' attorneys - in an effort to force coverage of legal expenses and any judgments entered against the diocese. That action is still pending.
The diocese has a deadline of March 17 to file a reorganization plan, with an additional two months set aside to seek approval from creditors.
