Archdiocese of New Orleans files for bankruptcy

CNA Staff, May 1, 2020 / 13:54 pm

Under financial pressure from clerical abuse litigation compounded by the coronavirus crisis, The Archdiocese of New Orleans announced May 1 that its administrative offices are filing for Chapter 11 bankruptcy.

The filing will affect only the administrative office of the archdiocese and will not impact schools, Masses, and other ministries. Archbishop Gregory Aymond said the decision was made after prayer and consultation.

"I, along with a team of advisors, believe that reorganization will create an opportunity for us to renew our commitment to the faithful and the New Orleans community by restructuring our financials, increasing our transparency and creating a path forward in hopes that we can continue and strengthen our core mission: bringing Christ to others," he said.

The archbishop said the move will allow funds to be given directly to sex abuse victims rather than being tied up in prolonged litigation efforts. "The healing of victims and survivors is most important to me and to the church," he said.

In a letter to members of the archdiocese, Aymond explained that recent years have seen financial struggles.

"The resurgence of the clergy abuse crisis has been particularly challenging, especially as it has played out regularly in the local media," he said.

"The prospect of more abuse cases with associated prolonged and costly litigation, together with pressing ministerial needs and budget challenges, is simply not financially sustainable," he continued. "Additionally, the unforeseen circumstances surrounding COVID-19 have added more financial hardships to an already difficult situation."

The filing makes the Archdiocese of New Orleans the latest U.S. diocese to declare bankruptcy, following the wave of sexual abuse revelations made public in 2018. Earlier this year, the Dioceses of Harrisburg and Buffalo also filed for bankruptcy.

In late 2018, Aymond released a list of priests who had been credibly accused of sexual abuse of minors. The archdiocese said last year that it had allotted more than $8 million for payment of abuse claims.

The archbishop clarified that "[f]iling for Chapter 11 does not mean the Archdiocese of New Orleans is closing, and we will certainly continue to pay our bills responsibly."

He stressed that the move "only affects the archdiocesan administrative offices and will not affect the individual parishes, their schools, schools run by the various religious orders, or ministries of the church."

Aymond said he believes Chapter 11 reorganization will allow for a timely resolution to abuse claims, contributing to the healing of those who have been harmed by members of the clergy.

"Very importantly, taking this action will allow us to address remaining clergy abuse claims, all of which stem from allegations dating back several decades ago, in a way that will allow funds to go directly to victims," he said. "No money from parish collections will be used to resolve claims. Parish funds are separate from archdiocesan accounts and the pastor decides how those are used for parish ministry."

Fr. Patrick Carr, vicar of finance for the Archdiocese of New Orleans, elaborated in a May 1 statement on what the bankruptcy filing will mean.

"Filing for Chapter 11 is a voluntary action that will allow the Archdiocese to implement a financial reorganization plan detailing how available assets and insurance coverage will be used to settle claims and negotiate reasonable settlements," he said.

"Under the Court's supervision, we will continue to minister to the people of our local church and to responsibly meet our payroll obligations and other costs," Carr said. "Current creditors of the Archdiocese will be assured payment via a Chapter 11 plan of reorganization that will be approved and controlled by the Court."

There is no concrete timeline for the reorganization to take place.

Archbishop Aymond asked for prayers during the process, asking for God's grace that "the Archdiocese of New Orleans will emerge from this experience stronger with a renewed commitment to our mission."