FAQ: Diocesan Reorganization

Catholic Star Herald – Diocese of Camden

October 8, 2020

Last week, the Diocese of Camden filed for reorganization under Chapter 11 of the United States Bankruptcy Code. Here are some frequently asked questions.

1. What exactly is Chapter 11?

Chapter 11 reorganization is a process pursuant to which an entity seeks to reorganize financially under court supervision. The twin goals are for an entity to equitably and proportionally address the financial claims of those to whom it owes money and to emerge with its operations intact. A Chapter 11 filing immediately stops all efforts at collection of debts and legal actions against the entity. It does not mean that the entity is closing or terminating its programs. Under Chapter 11, an entity is able to maintain its normal operations, continue to provide employees with salaries and benefits, and pay retiree benefits.

2. Why is the Diocese seeking reorganization under Chapter 11 now?

The cost of settlements through the Independent Victims Compensation Program, which was established to provide expedited payments to victims of abuse, has already exceeded $8 million, and the Diocese’s financial position has been impacted as a result of the COVID-19 pandemic. Additionally, the recent repeal of the statute of limitations has resulted in over 50 lawsuits being filed against the Diocese involving long-ago claims of abuse. These factors have presented a financial position that is no longer sustainable, and the Diocese seeks to equitably and proportionally address the claims that it confronts, to address future claims that might arise, and to enable it to continue its missions of evangelization and service.

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