The bankruptcy filing automatically delays the case in Kent County Superior Court, the first of eight consecutive abuse trials scheduled in Delaware.
"This is a painful decision, one that I had hoped and prayed I would never have to make," said the Rev. W. Francis Malooly, the bishop of the diocese, on the diocese's Web site.
Malooly said the decision was made "after careful consideration and after consultation with my close advisers and counselors" and that believed "we have no other choice." He said "filing for Chapter 11 offers the best opportunity, given finite resources, to provide the fairest possible treatment of all victims of sexual abuse by priests of our Diocese."
"Our hope is that Chapter 11 proceedings will enable us to fairly compensate all victims through a single process established by the Bankruptcy Court," Malooly said.
The diocese covers Delaware and the Eastern Shore of Maryland and serves about 230,000 Catholics. It is the seventh U.S. diocese to file for bankruptcy since allegations erupting seven years ago against Catholic clergy in Boston.
Monday's case would have been the first to come to trial under a Delaware law that created a two-year "lookback" window that allowed claims of abuse to be brought regardless of whether the statute of limitations had expired. More than 100 lawsuits were filed before the period ended this summer, with four being settled.
Thomas Neuberger, an attorney representing 88 alleged victims, described the bankruptcy filing as a "desperate effort to hide the truth from the public and conceal the thousands of pages of scandalous documents" from being made public in court.
"This filing is the latest, sad chapter in the diocese's decades long 'cover-up' of these despicable crimes, to maintain the secrecy surrounding its responsibility and complicity in the sexual abuse of hundreds of Catholic children," Neuberger said in a statement.
Civil liability is the only recourse for victims of abuse that happened long ago because the U.S. Supreme Court has said states cannot change the statute of limitations for criminal cases.
Neuberger said the diocese's action may mean some sick and aging victims - some who claim they were abused when they were as young as 8 - could die before getting their day in court.
Attorneys negotiated throughout Sunday trying to reach a settlement, but couldn't.
The Diocese of Wilmington is the seventh U.S. Catholic diocese to seek Chapter 11 bankruptcy protection since the church abuse scandal erupted seven years ago in the Archdiocese of Boston. Dioceses in Davenport, Iowa; Fairbanks, Alaska; Portland, Ore.; San Diego; Spokane, Wash., and Tucson, Ariz., also sought bankruptcy protection. The San Diego case was dismissed.
Neuberger said he would make court filings in Delaware to "meet this fraudulent tactic with the full and immediate force of the law." He also vowed to seek out all assets of the diocese and its parishes.
More than 20 Delaware plaintiffs have filed lawsuits against former priest Francis DeLuca. DeLuca served for 35 years but was defrocked last summer after having been jailed in 2007 in New York for repeatedly molesting his grandnephew.
Lawsuits filed by DeLuca's alleged victims were scheduled for trial in October, the first on Monday.
The diocese has paid more than $6.2 million since 2002 to settle sexual abuse lawsuits. Like others around the country, it also has paid settlements to alleged victims who did not file lawsuits.
An annual report filed earlier this year by the U.S. Conference of Catholic Bishops stated that the church has paid more than $2.6 billion in settlements and related expenses since 1950.
On the Net: Catholic Diocese of Wilmington: http://www.cdow.org