New Orleans Diocese files for bankruptcy

The Archdiocese of New Orleans filed for Chapter 11 bankruptcy on 1 May, citing growing financial strain caused by claims stemming from over 50 years of clerical abuse, and the COVID-19 related shutdown of church services, leading to a drop in income.

The filing means that the claims will all move en-masse from the Loiusiana State Court to a single federal court bankruptcy hearing, with no jury. It is hoped that this will speed up proceedings, and eventual settlement. However, the immediate effect of the bankruptcy is that it will temporarily halt any ongoing proceedings for compensation claimed for clerical abuse.

At the initial hearing, claimants’ lawyers asked the judge to order that no salary or pension payments should be made by the Archdiocese to priests accused of abuse, and asked that it should also be ordered to disclose it’s plan for using cash in one of its bank accounts. At a second hearing on 4 May, Bankruptcy Judge Meredith S. Grabill went on to order the immediate halt to any payments to priests who had been “credibly accused of child abuse”.  This term stems from a list of priests – first released in November 2018 and compiled by the Archdiocese – who it deemed to have been “credibly accused” of abusive acts.

The church asked for court approval to allow it to continue paying utility bills and the salaries of its employees, as well as insurance premiums, which was granted by the Judge.

It is expected that the Judge will, in due course, also impose a time limit on those who wish to pursue a claim, who haven’t already done so by 1 May.

The Archdiocese is the 27th to file for bankruptcy in the USA since 2004, in the face of thousands of claims being made by survivors of clerical abuse.  However, unlike other dioceses, New Orleans was not facing an enormous number of claims before the filing. Terry McKiernan, founder of bishopaccountability.org, which tracks clergy abuse in the USA, says that the New Orleans bankruptcy may be an “anticipatory bankruptcy”, which other dioceses will follow.

Jeff Anderson, a well known lawyer in the arena of abuse compensation in the USA, says that “what [the New Orleans bankruptcy] really signals is what is now coming across this country. There’s going to be a wave of preemptive reorganisations.”  He sees such filings as being disadvantageous in several ways to claimants. “They’re not required to come clean with all the histories, and the cover-up of all those histories, of all those offenders,” he said. “And they’re not required to pay anything close to full value on those claims. They all get suppressed or diminished.”

However, Terry McKiernan, did acknowledge that in one sense the bankruptcy will make it easier for survivor claimants in that they will be allocated a place on a matrix according to a physical description of their alleged abuse and other factors, to determine their share of a settlement.  This means the process is quicker than having to pursue a claim on an individual basis, which can be slow. However he also went on to say that  “the effect of the abuse is not necessarily commensurate with the physical description [on a matrix]”, and this can be upsetting to many survivors.

Despite 16+ years of exposure of clerical abuse, claims, and bankruptcies, the financial and reputational cost  to  the Roman Catholic Church in the USA appears to continue unabated with little relief for either the church or the survivors of clerical abuse in America.


Chambers_J-18_print

James Chambers, Associate, BLM
james.chambers@blmlaw.com

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