Catholic Archdiocese of Baltimore Files for Bankruptcy

From a Washington Post story by Michelle Boorstein headlined “Catholic Archdiocese of Baltimore, facing possible slew of lawsuits, files for bankruptcy”:

The Catholic Archdiocese of Baltimore filed for bankruptcy protection Friday, less than two days before a new state law takes effect allowing victims of child sexual abuse to sue institutions, no matter how long ago the abuse took place.

Federal bankruptcy law halts all lawsuits against an entity that files for bankruptcy. Instead, the legal action will shift to a bankruptcy court, where the process — if successful — will set a permanent end-date when alleged victims of abuse related to the church can file claims, rather than opening a permanent window as the law intended.

Each diocesan bankruptcy is unique, experts say, and outcomes depend on the court, insurance arrangements and the legal setup of the diocese. Some legal analysts said the move by the country’s oldest Catholic diocese could limit damages for some survivors, while other experts say it could more equitably distribute Baltimore’s assets and offer anonymity and streamlined financial awards, which some accusers may value.

But it also means there will be no subpoenas or public testimony before a jury, which to some survivors is a blow to transparency and a crucial loss.

“What victims lose is the opportunity to tell their stories in court, and many have been waiting their whole lives to do this,” said Robert Jenner, a Baltimore attorney who represents some of the survivors who planned to sue.

“All bankruptcies are not created equal,” said Terry McKiernan of BishopAccountability, a nonprofit that tracks Catholic abuse cases and documents, including diocesan bankruptcies.

He said in some places survivors have felt “horrible” watching bishops try to restrict which church assets should be included, or seeing requests to release documents related to abuse denied or strictly limited. In other dioceses, McKiernan said, survivors have been more satisfied in bankruptcies.

Most importantly for abuse survivors, the bankruptcy process sets a deadline for creditors — including them — to file a claim.

“What if you just can’t face it yet? Or if you’re far away and don’t hear about it?” McKiernan said.

The bankruptcy filing came hours after lawyers publicly announced two complaints they had planned to file against the archdiocese Sunday, allegations from two women who say they were raped as children and that the archdiocese looked the other way.

A coalition of lawyers filing lawsuits against the Archdiocese of Baltimore also has a client filing a lawsuit against the Archdiocese of Washington for abuse that allegedly occurred in Montgomery County. That complaint would not be impacted by Friday’s bankruptcy filing.

Maryland includes three Catholic dioceses: Baltimore, the Archdiocese of Washington — which includes the populous D.C. suburbs — and the Diocese of Wilmington. Wilmington, however, went through a Chapter 11 bankruptcy starting in 2009 and therefore can’t be sued for any alleged abuse before that year.

Asked about what impact — if any — it expects from the new law, spokespeople for the Washington Archdiocese did not respond to requests for comment.

Victims’ attorneys have been advertising since the new law passed in April. Several based in Maryland said hundreds of people have come forward so far, including accusers of institutions from private and public schools to religious groups and youth organizations.

It wasn’t immediately clear Friday what impact filing under Chapter 11 of the bankruptcy code will mean for the archdiocese’s 153 parishes and dozens of ministries, including within the city of Baltimore. Chapter 11 allows organizations and businesses to reorganize and address creditors while keeping their core functions going.

Who, specifically, pays damages can become complicated and depends on what insurers decide. A few weeks ago, Buffalo area taxpayers paid the bulk of a $10 million settlement stemming from five abuse lawsuits filed under a law similar to Maryland’s.

Baltimore is the 36th U.S. Catholic diocese or religious order to file for such protection since the Catholic clergy sex abuse crisis exploded into public view in the early 2000s. Baltimore will be the sixth diocese to file in 2023.

The filing follows years of legal and political wrangling between state officials and the archdiocese over what legal recourse accusers have.

For two decades, lawmakers had filed measures to end or limit the statute of limitations for abuse victims to sue, but were beaten back by opponents including lawyers for the Catholic Church. The Maryland General Assembly passed the bill in April, the same day state Attorney General Anthony G. Brown released a thick report about sexual abuse and “physical torture” by more than 150 clergy members in the archdiocese from the mid-1940s to 2002.

The report alleged that more than 600 children were abused in that time frame.

The Child Victims Act removes any statute of limitations for child sexual abuse victims to seek civil damages from institutions that harbored their abusers. Dozens of other states, recognizing the lifelong trauma sexual abuse survivors face, have also removed such restrictions — but for a limited window of time. Maryland’s law is unusual in that has no time limit, and because it caps damages. Abuse victims suing public institutions can receive a maximum of $890,000, and those suing private institutions or individuals can receive a maximum of $1.5 million.

It wasn’t immediately clear Friday what other potential creditors, besides abuse survivors, the archdiocese has.

On Sept. 5, Lori released a public statement saying the new law “has the potential to have devastating financial consequences” for the archdiocese as well as many other institutions and organizations including public school systems. In the statement. Lori said he was considering bankruptcy, and in the weeks since, he has held meetings with various groups of clergy, staff and laypeople to discuss it.

“The underlying issue that has led us to this place is indeed horrific. Innocent children were harmed, and lives were ruined,” Lori wrote.

According to the Associated Press, the Baltimore archdiocese has paid more than $13.2 million to 301 abuse victims since the 1980s, including $6.8 million toward 105 voluntary settlements.

The Maryland Catholic Conference — the lobbying arm for the three dioceses in the state — testified along with tort reform advocates in February to say they believe the Child Victims Act is unconstitutional. That’s because in 2017 the legislature raised the age people abused as children could sue from 25 to 28. That 2017 bill tucked in a provision that essentially made the change to 38 — and no older — permanent. For the legislature in 2023 to now lift all age limits, the Church and some others argue, is unconstitutional.

Brown has said he believes the law is constitutional and that he is prepared to defend it to the Maryland Supreme Court.

Marie Reilly, a law professor at Pennsylvania State who researches Catholic dioceses that file for bankruptcy, said there is no clear answer to whether victims would be better served under a bankruptcy or by a civil suit.

“This will be fantastic for creditors who hadn’t started [the process of preparing a suit] or don’t have the strongest claims, and it’ll stink for someone who was days away from their jury trial. Just because of the nature of bankruptcy, it will be good for some creditors and maybe not for others,” she said.

Michelle Boorstein has been a religion reporter since 2006. She has covered the shifting blend of religion and politics under four U.S. presidents, chronicled the rise of secularism in the United States, and broken financial and sexual scandals from the synagogue down the street to the Mormon Church in Utah to the Vatican.

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