Key Facts
- Judge
- Heather Cooper
- Court
- U.S. Bankruptcy Court, Burlington
- Parish assets estimated
- Up to $500 million
- Diocese's highest-level holdings
- About $35 million
- Past settlements
- $34.5 million for 67 lawsuits
- Pending claims
- 119 claims dating back to 1950
Background
The Vermont Roman Catholic Diocese filed for Chapter 11 bankruptcy protection in the fall of 2024, citing that past priest misconduct settlements had reduced its highest-level financial holdings by half, to about $35 million. The diocese is one of 44 U.S. Catholic entities to seek Chapter 11 protection.
Over the past two decades, the diocese has paid $34.5 million to settle 67 clergy misconduct lawsuits, yet still faces 119 more claims dating back as far as 1950. To raise funds, it has sold its South Burlington headquarters for $3.13 million and Rutland's former Loretto Home senior living facility for $1 million, and is seeking court permission to transfer Rice Memorial High School campus for $4.3 million.
Current Situation
In a written order, Judge Heather Cooper of the U.S. Bankruptcy Court in Burlington ruled that creditors can pursue not only the diocese's highest-level bank and building holdings, but also the trust-sheltered local property and possessions of nearly 70 parishes. The order does not promise any parish assets, but permits abuse claimants to file an 'adversary proceeding' to determine their entitlement to local holdings.
The abuse claimants' attorneys submitted a lawsuit Friday asking the judge to declare that all church assets are available to pay creditors. The diocese filed an 18-page objection on July 21, and its leaders declined comment. The court has yet to announce a next step or schedule.
| Item | Amount/Number |
|---|---|
| Highest-level holdings | $35 million |
| Parish assets estimated | $500 million |
| Past settlements paid | $34.5 million |
| Lawsuits settled | 67 |
| Pending claims | 119 |
| Legal bills over two years | $2 million |
| South Burlington HQ sale | $3.13 million |
| Loretto Home sale | $1 million |
| Rice Memorial High School transfer | $4.3 million |
Impacts
If the lawsuit succeeds, abuse claimants could access an estimated $500 million in parish assets, significantly increasing the funds available for settlements. This would affect the diocese's financial reorganization and its ability to compensate survivors.
The diocese has already spent $2 million in legal bills over the last two years. Continued litigation could deplete resources further, as diocese attorney Steven Kinsella expressed concern about insufficient funds to pay for litigation and compensate survivors. The outcome will affect the diocese, its parishes, and the more than 100 abuse claimants represented by the committee.
Future Outlook
Scenario analysis: The possibilities below are not certain predictions.
The diocese now has two choices: negotiate an agreement with abuse claimants in closed-door mediation talks set for this week, or continue to fight the creditors in court. If mediation succeeds, a settlement could be reached without prolonged litigation. If not, the court may need to rule on the adversary proceeding, potentially leading to years of litigation and millions in legal fees.
Under federal law, both the court and creditors must approve any Chapter 11 reorganization plan. If the court declares parish assets available, the diocese may need to sell additional properties to fund settlements. If not, the diocese may proceed with its current plan, but could face continued legal challenges from claimants.
Source: boston.com
