Diocese Seeks Exit From Bankruptcy
The Roman Catholic Diocese of Burlington has asked a U.S. Bankruptcy Court judge to dismiss the Chapter 11 case it launched two years ago, arguing that settlement talks with survivors of clergy sexual abuse have reached an impasse. In a court filing, church lawyers said continued mediation would not be productive and that dismissal would preserve diocesan resources while allowing the diocese and survivors to pursue resolution outside the costly bankruptcy process. The diocese has spent $2 million on legal fees, including court-ordered counsel for creditors, with no end in sight, according to court records. Judge Heather Cooper has scheduled a hearing on the dismissal request for Dec. 8.[S1][S2]
The move came after private mediation sessions on Monday and Tuesday ended with the diocese presenting what it called its best and final offer: a $29.4 million collective settlement that would average about $247,000 for each of more than 100 claimants. The committee representing creditors declined the proposal. The diocese said the settlement would be funded in part by millions raised from recent and pending sales of diocesan property, including eldercare homes and the campus of Rice Memorial High School. Bishop John McDermott wrote to parishioners that he was extremely disappointed by the bankruptcy process and believed the diocese had made a good-faith effort to resolve it in a timely and just manner, but that its best offer was not accepted.[S1][S2]
Parish Assets at the Center of the Fight
The negotiations were underway while the court edged toward deciding a central dispute: whether any share of the more than $400 million in assets the diocese shifted to local parishes over recent decades ought to be made available to people alleging abuse. Church leaders have conceded that assets were placed in separate parish trust accounts to protect local churches from sex-abuse lawsuits, yet they argue the moves were proper and that the bankruptcy should cover only diocesan holdings. On Sunday, Judge Cooper allowed the claimants' committee to argue that parish resources belong to the diocesan estate, paving the way for a consequential legal fight.[S1][S2]
Lawyers representing the claimants indicated they would fight the dismissal. Brittany Michael, an attorney for the creditors' committee, contended that the diocese is not being compelled to litigate but has opted to contest every matter the difficult way and then place the blame for the costs on others. Daniel Stack, a committee member whose own abuse claim was frozen when the diocese sought bankruptcy, said the diocese sidestepped accountability just before his trial two years ago and is now seeking to exit the process entirely. He called the request a second bid to dodge accountability and said it does not reflect an institution operating in good faith.[S1][S2]
What Dismissal Would Mean
Shutting down the bankruptcy without a reorganization plan would leave the diocese's money problems unresolved. It would restart the abuse suits that the Chapter 11 case had paused and send the church and claimants back to court under a state statute that removed the time limit for sex-abuse claims. The diocese filed on Sept. 30, 2024, citing roughly 70 priest misconduct settlements that had reduced its funds by half, to about $35 million, with over 100 additional abuse claims reaching back to 1950 still pending. Bishop McDermott had presented bankruptcy as the fairest route through the wave of litigation while protecting the diocese's religious mission, an approach survivor groups condemned at the time.[S1][S2]
