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Law expert’s article in ‘America’ catalyst to media blitz

Naffziger’s discussion of bankruptcy, Catholic Church last autumn led to many calls

Fred Naffziger
The phone rang a number of times in Fred Naffziger’s office last autumn. One day it was National Public Radio. The next day it was Reuters, then the BBC, Associated Press and CBS. They all wanted to talk to Naffziger about the Catholic Church and bankruptcy.

Naffziger, a corporate law expert and business professor at IU South Bend, wrote about the topics in a fall issue of America, a weekly Catholic magazine published in New York City. The article appeared in October, well before the bankruptcy issue hit the front pages.

“It talks about whether or not the sexual abuse cases could force the American Catholic Church into bankruptcy,” Naffziger explained about the article. “Instead of just talking about the sexual abuses, I thought I’d look down the road a year or so and talk about what might happen and why. To me, bankruptcy is just a possibility but not probable.”

Naffziger said that when the discussion of bankruptcy surfaced, newspapers and wire services began to do Internet searches for experts on the topic. His article in America appeared in the searches, the phone began to ring, and he was answering questions about how the complicated process might work.

The issue includes complex topics defining the assets and liabilities of the church and what has been paid to those who have settled already with the diocese. Other issues include individual church assets versus diocesan assets, and the governance of the diocese by the bishop.

He said that the Roman Catholic Church is not a publicly traded company, so it does not have to divulge finances. And with the uncertainty of the stock market, the church’s endowment has shrunk. If a diocese would file a Chapter 11, the bishop loses control of the financial purse strings and the “books would be open to public scrutiny,” Naffziger said. “But an advantage would be that a parameter would be placed on the filing of sexual abuse claims. No others could be filed.”

But with all the complications and emotions, the process is painful.

“It is a disappointment to many Catholics,” Naffziger said. “The faithful do not want the mission of the church to be halted, or the church to go out of business.”

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Publication date: January 31, 2003
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