Bankruptcy Hits the Catholic Church

Bankruptcy Hits the Catholic Church

The sex abuse scandal has had a major impact on the Catholic church, and not just in its reputation. The Catholic Diocese of Stockton, Calif., recently said it would become the 10th diocese to file for protection under Chapter 11 bankruptcy law as a result of the scandal, according to The Wall Street Journal.

Bishop Stephen Blaire said that reorganization was the only option to help cover the increasing legal costs. In total, the diocese has spent $14 million in legal settlements and judgments in the past two decades, and no longer has funds to cover any pending or future cases.

The diocese’s Chapter 11 filing would halt any current proceedings, and potentially allow the discharge of liabilities by setting up a trust to compensate victims of sexual abuse.

The Catholic Diocese of Stockton, Calif. isn’t alone, as the Milwaukee Archdiocese recently submitted its plan of reorganization three years after it declared bankruptcy. According to the Journal Sentinel, the Archdiocese is currently facing 575 claims, with legal fees greater than $11 million. This is one of the biggest bankruptcies filed by any of the Catholic dioceses in the U.S., according to legal experts.

Archbishop Jerome Listecki – who filed the bankruptcy – hopes to put the case in the past to begin focusing on church duties moving forward.

“It’s been three years since our Chapter 11 petition was filed, and it is time for the archdiocese to return its focus to its ministry of charity, service and education,” Topczewski, told the news source. “Outreach to abuse survivors will always be part of that ministry.”