Catholic Church Moves Funds Around to Shield $2 Billion in Assets from Abuse Victim Settlements
As more victims of sexual abuse by priests sued various dioceses around the country, churches began transferring and reclassifying assets, and filing for bankruptcy, according to a Bloomberg Businessweek review of court filings by lawyers representing churches and victims over the last 15 years.
Filing for Chapter 11 bankruptcy has allowed the dioceses to reach universal settlements and protected them from further victim claims. Dioceses have chosen the bankruptcy option more than 20 times since 2004.
A spokeswoman for the U.S. Conference of Catholic Bishops stated that the “decision on whether to seek Chapter 11 protection in a given case is the diocese’s alone.”
However, in some cases the Vatican has signed off on an archdiocese’s financial reorganization before that archdiocese filed for bankruptcy.
In 2015, St. Paul and Minneapolis filed Chapter 11 bankruptcy, claiming only $50 million in assets, while lawyers for victims estimated the archdiocese’s worth at about $1.7 billion. The Twin Cities archdiocese subsequently reached the largest bankruptcy settlement by an archdiocese.