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Insurance companies to buy back policies as part of Milwaukee Archdiocese bankruptcy

The exterior of a Catholic church building.
The exterior of a Catholic church building.

MILWAUKEE (WSAU-Wheeler News)  The Milwaukee Catholic Archdiocese has taken a big step toward resolving its nearly three-year-old bankruptcy case. A group of insurers that includes Lloyd's of London has agreed to buy back policies they sold to the church, in exchange for avoiding liability in paying claims to victims of sex abuse by priests.

Church spokesman Jerry Topczewski would not say how much the archdiocese will get from the settlement. He says it will be spelled out in the church's financial re-organization plan which must be approved in federal bankruptcy court. Topczewski did not know when the plan will be filed. Media reports say settlement talks continue with another carrier, Stonewall Insurance.

The Milwaukee Archdiocese filed for bankruptcy in 2011, saying it doesn't have the money to pay millions-of-dollars to victims of sex abuse by priests dating back for decades. It's been one of the most hard-fought Catholic bankruptcy actions in the country, as both sides have wrangled over which victims should get compensated -- and which assets can be protected from creditors. The court has ruled that the archdiocese cannot tap assets from its local churches to pay the creditors -- mostly around 575 sex abuse victims who filed for compensation in the bankruptcy process. Their attorney, Michael Finnegan, says the Lloyd's of London settlement excludes victims -- a first among the nation's church bankruptcies.

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