A U.S. Bankruptcy Court will allow clergy abuse claimants to sue for an estimated half-billion dollars in parish assets to fund settlements under the Vermont Roman Catholic Diocese鈥檚 current financial reorganization case.
In a written order, Burlington-based Judge Heather Cooper said creditors can pursue not only the highest-level bank and building holdings of the state鈥檚 largest religious denomination, but also the trust-sheltered local property and possessions of nearly 70 parishes 鈥� from St. Edward the Confessor in northernmost Derby Line, population 687, to St. Joachim in southernmost Readsboro, population 702.
The order doesn鈥檛 promise any parish assets, but simply permits abuse claimants to file a lawsuit 鈥� what the bankruptcy court labels an 鈥渁dversary proceeding鈥� 鈥� to determine whether they鈥檙e entitled to local holdings.
鈥淯nless settled,鈥� Cooper wrote of the question in her July 28 ruling, 鈥渢here may be years of litigation ahead and millions of dollars spent in attorneys鈥� fees and costs that could have been paid valid abuse claims.鈥�
The diocese鈥檚 leaders and lawyers declined VTDigger鈥檚 request for comment, although they filed an 18-page objection to the pursuit of parish assets as recently as July 21. They now have two choices available in court: try to negotiate an agreement with abuse claimants in closed-door mediation talks set for this week, or continue to fight the creditors, having already spent over the last two years.
Attorneys for a representing submitted its lawsuit Friday asking the judge to declare that all church assets are available to pay creditors.
鈥淎bsent a declaration,鈥� the abuse claimants鈥� attorneys wrote in a filing, 鈥渢he diocese will continue to evade its moral, financial and legal responsibility to the survivors.鈥�
The court has yet to announce a next step or schedule on the issue.
The diocese , arguing that a past series of priest misconduct settlements had reduced its highest-level financial holdings by half, to about $35 million. But abuse claimants argue the collective wealth of 66 parishes 鈥� assessed at up to $500 million 鈥� also should be on the table, even after the .
鈥淲hat the parties need at this stage in the case is guidance from the court regarding the actual legal status of the assets at question in order for us to reach a resolution,鈥� Brittany Michael, lawyer for the claimants鈥� committee, told the judge July 28 of why she wanted to file a lawsuit.
In response, attorneys for the diocese voiced fear that continued hearings would cost everyone more money.
鈥淭he diocese is very concerned that if this proceeds, it will not have sufficient funds to pay for the litigation and, ultimately and most importantly, compensate the survivors,鈥� said Steven Kinsella of the Minnesota firm of Fredrikson & Byron.
Under , both the court and creditors must approve any Chapter 11 reorganization plan.
The diocese 鈥� one of to seek Chapter 11 protection 鈥� is trying to reorganize its depleting finances after paying $34.5 million to settle 67 clergy misconduct lawsuits in the past two decades, according to records, only to dating .
To raise money, the diocese has sold its and . It鈥檚 now seeking court permission to transfer its parochial to a new nonprofit group of supporters.
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