Religion & Law

Two Catholic Dioceses File For Chapter 11 Bankruptcy Reorganzation

By Howard M. Friedman

In the face of sex abuse lawsuits filed after states enacted legislation reviving previously time-barred claims, on Oct. 1 two more Catholic dioceses filed for bankruptcy reorganization under Chapter 11. 

The Diocese of Rockville Centre, New York (covering Long Island) issued a press release and a letter from Bishop John Barres. The letter said in part:

[I]n the year since the passage of the Child Victims Act, more than 200 lawsuits alleging sexual abuse have been filed against the Diocese of Rockville Centre. What became clear is that the Diocese could not continue to carry out its spiritual, charitable and educational missions while also having to shoulder the increasingly heavy burden of litigation expenses associated with these cases.

Filing for Chapter 11, we believe, is the only way for the Diocese to ensure a fair and equitable outcome for everyone involved.... 

During this period of restructuring, most Diocesan operations and ministries will continue without interruption.... 

Since the parishes and schools of the Diocese of Rockville Centre are separate legal entities, they are not included in this Chapter 11 filing. But it is also the case that after Chapter 11, the Diocese will have fewer financial resources to help struggling schools and parishes.

CNN reports on the filing, noting that this is the largest U.S. diocese to file for bankruptcy.

The Diocese of Camden, New Jersey issued a letter from Bishop Dennis Sullivan as well as an FAQ document and a summary of developments. The Bishop's letter reads in part:

The effects of the pandemic, which have curtailed our revenue and deeply impacted our parishioners and neighbors, were further compounded by the over $8 million we have paid out this year through the New Jersey Independent Victims Compensation Program to victims of clergy abuse, money which we have had to borrow. Additionally, the recent repeal of the statute of limitations has resulted in over fifty lawsuits being filed against the diocese involving long-ago claims of abuse. If it were just the pandemic, or just the costs of the Victims Compensation Program, we could likely weather the financial impact; however, the combination of these factors has made that impracticable. Because of this, today I announce that the Diocese of Camden is filing for reorganization under Chapter 11 of the United States Bankruptcy Code.

Bloomberg News reports on the filing.

Full post as published by Religion Clause on October 04, 2020 (boomark / email).