Archdiocese of Baltimore files for bankruptcy amid clergy sex abuse claims

Washington, D.C. Newsroom, Sep 29, 2023 / 15:49 pm

The Archdiocese of Baltimore declared bankruptcy on Friday several weeks after warning it might do so in response to a looming wave of sex-abuse-related lawsuits.

Archbishop William Lori said in a statement on Friday that ”after consulting with numerous lay leaders and the clergy of the archdiocese,” he had made the decision for the archdiocese to file “for Chapter 11 reorganization.”

“With an approved plan under Chapter 11, the archdiocese will be reorganized, victim-survivors will be equitably compensated, and the Church will continue its mission and ministries,” the archbishop said.

The process will “involve several steps over the next two to three years,” Lori said, including “accept[ing] claims from victim-survivors for a specified period of time” and then “enter[ing] negotiations” with those individuals.

The filing, Lori said, is “the best path forward to compensate equitably all victim-survivors, given the archdiocese’s limited financial resources, which would have otherwise been exhausted on litigation.” 

“Staggering legal fees and large settlements or jury awards for a few victim-survivors would have depleted our financial resources, leaving the vast majority of victim-survivors without compensation while ending ministries that families across Maryland rely on for material and spiritual support,” he said.

The prelate also made the announcement via a prerecorded video uploaded to YouTube on Friday afternoon.

Responding to a user question on its Facebook account, the archdiocese on Friday told members of the diocese that “the money you place in the collection basket or give to your parish online will continue to be used to fund your individual parish.”

“Archdiocesan parishes and schools are separate legal entities, distinct from the archdiocese,” the post said. “Charitable entities such as Catholic Charities are similarly separate legal entities. The ministries and operations of parishes, schools, and other entities, such as our Catholic Charities agencies, should not be directly affected by the archdiocese’s Chapter 11 proceeding.”

Lori had said earlier this month that the archdiocese was considering bankruptcy as one possible maneuver to deal with a potential wave of sex abuse lawsuits against Baltimore. A new law going into effect Oct. 1 will end the statute of limitations for civil lawsuits for negligence in relation to child sexual abuse, opening the local Church up to lawsuits over abuse from years past.  

The archdiocese will join more than two dozen other U.S. dioceses that have filed for bankruptcy in recent years. Behind Baltimore, the Archdiocese of San Francisco is the most recent, having filed in late August in response to numerous abuse lawsuits. 

In his public statement earlier this month, Lori said a bankruptcy filing would help establish “a reasonable and equitable method for compensation of victim-survivors while also preserving the many vital ministries of the archdiocese.”

“In this type of reorganization, the archdiocese would be required to provide resources which would be used to compensate victim-survivors while at the same time ensuring our mission can continue,” Lori said. 

If the archdiocese attempted to litigate each individual lawsuit, Lori said, it would “potentially lead to some very high damage awards for a very small number of victim-survivors while leaving almost nothing for the vast majority of them.” 

“The archdiocese simply does not have unlimited resources to satisfy such claims; its assets are indeed finite,” the prelate said at the time. 

The Maryland attorney general earlier in the week had released an unredacted report on child sexual abuse in the Archdiocese of Baltimore, one that named most of the individuals accused there. A redacted version of the report had been released in April.

The report alleged more than 600 children were abused by 156 people in the diocese over a period beginning in the 1940s through 2002.