INVESTIGATION: What Is the Real Reason the Archdiocese of New Orleans Declared Bankruptcy?

NEW ORLEANS (LA)
Big Easy Magazine

May 1, 2021

By Helen Lewis

On May 1, 2020, the Archdiocese of New Orleans filed for Chapter 11 reorganization. Since filing, the archdiocese has not been entirely honest about the real reason that they declared bankruptcy. 

When asked for a statement on why they declared bankruptcy, a spokeswoman for the archdiocese forwarded along a press release and informational booklet, commenting that “As this is a legal proceeding pending before the federal bankruptcy court, we think it is imprudent to comment further.” 

The press release explained, “In order to continue effectively ministering to the needs of the church community and victims and survivors of clergy abuse, the Administrative Offices of the Archdiocese of New Orleans announced today that it has filed for Chapter 11 reorganization. The move was necessitated by the growing financial strain caused by litigation stemming from decades-old incidents of clergy abuse as well as ongoing budget challenges. The unforeseen circumstances surrounding COVID-19 have added more financial hardships to an already difficult situation.” 

Elaborating on this reasoning, Archbishop Gregory Aymond wrote, “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.”

What Aymond is referencing is the recent surge in sexual abuse claims after he finally released a list of 57+ church officials who had been credibly accused of assaulting and raping minors

The list’s publication emboldened victims to speak up and even led to some recovering repressed memories of their trauma at the hands of the listed Catholic officials. Since its initial publication, the roster has expanded many times, leading to even more people filing claims against the church. 

Through statements and documents, the archdiocese has cited “financial struggles” as a result of the surge in claims as the primary reason why it filed for bankruptcy. However, it was revealed that the church actually is solvent, meaning it’s capable of paying all its legal debts. It’s very uncommon, although it’s not illegal, for a solvent organization to declare bankruptcy. 

The archdiocese has confirmed that it has hundreds of millions of dollars in assets and liabilities. These assets include a $306 million endowment along with $77 million worth of land and buildings. Liabilities on the other hand are a measly $38 million in bonds, $500,000 in employee health claims, and the $8.5 million set aside for abuse-related claims. 

In a letter to the Vatican, sent two days before the archdiocese filed for bankruptcy, it was uncovered that Archbishop Aymond revealed that the church was solvent and financially more than capable of handling the claims. He wrote, “The archdiocese is not insolvent. We have sufficient cash, cash equivalents, and investments to cover 100 percent of our liabilities.” Liabilities include abuse-related claims. 

In the letter, Aymond estimated the cost of settling the abuse claims for the archdiocese, in addition to insurance proceeds, would be $7 million. This number is revealing because it’s $1.5 million less than the $8.5 million the church set aside for claims. In other words, the church can easily afford to settle these claims, and would actually go under their budget in doing so. 

Something to note is the “insurance proceeds” that Archbishop Aymond mentioned. The money the church has been using and will continue to use to settle sexual abuse claims comes from insurance. 

Russ Hebron, the SNAP (Survivors Network of those Abused by Priests) Leader of Louisiana, emphasized this. “They have multiple insurance claims of policies that cover exactly this. Sex abuse. That’s what it’s for. They’re gonna pay for most of this. Not all of it, but most of this. It’s crazy. It’s a losing battle,” he explained. “They don’t care about the money, they can afford it. It’s not a matter of money. This is a matter of secrecy, a matter of silencing. The church thinks in centuries, not in weeks or years, but in centuries, literally. That’s how quickly they change. So that’s what we’re up against here.”

Aymond confirmed in a WWL-TV interview that insurance will pay for the sex abuse claims. He clarified that no church donation would be used to pay abuse claims and that the funds mostly come from insurance. When the reporter interviewing him asked why the archdiocese needs bankruptcy protection then if insurance pays for abuse claims, one of his advisors interrupted and said that the archbishop had already answered that question.

This isn’t the only public incident where the archdiocese tried to hide the extent to which their insurance would cover sex abuse claims. They also tried to hide it in court.

Legal representative from the creditor’s committee asked the Archdiocese of New Orleans to produce insurance records to show what resources they would have to enter into settlement talks with victims. According to court documents, the archdiocese objected to providing the records. 

The archdiocese objecting to providing information is a common tactic that sexual abuse survivors know all too well. It’s why many of them were not surprised that the archdiocese filed for bankruptcy. 

Richard Windmann, one of the founders of SCSA (Survivors of Childhood Sex Abuse) commented that “This a disappointing but not surprising move, as Archbishop Gregory Aymond now follows in the footsteps of dozens of catholic officials who have chosen to declare bankruptcy rather than allow survivors of clergy sexual abuse to bring their claims forward in open court.”

The development is disappointing because having to funnel their sex abuse claims through bankruptcy court has numerous disadvantages for sex abuse victims. 

Penn State law professor Marie Reilly, explained, “They’re not going to get their day in court the same way. You change from that winner-take-all payment protocol to a kind of sharing situation.” Clergy abuse survivors will recount their stories, and the severity of them will determine how large their share of the settlement will be. Of course, it can be hard to put into words all of the pain that being sexually assaulted as a child can cause someone. 

Stephen McEvoy, a sexual abuse survivor who filed a claim against the church after it declared bankruptcy commented, “I’m looking for both my medical care and my future medical care. I have suffered a stroke, I suffer every day of the week with medical problems. I’m looking for some kind of compensation for what this has cost me since the age of 12.” McEvoy’s sexual abuse led to numerous mental and physical issues as a result of the drinking he took up to cope with the trauma. 

Survivors want to make it clear that the archdiocese declaring bankruptcy is a litigation tactic that dehumanizes their claims against the church. “You know we’re talking about the crimes of raping our children.” Windmann said, “That’s what we’re talking about. And the bankruptcy court allows them to get away with that, and to not testify and be deposed.” 

In his many statements, Archbishop Aymond has tried to position the bankruptcy filing as a maneuver that’s actually beneficial for survivors, although none of them see it that way, for obvious reasons. 

“I strongly believe that this path will allow victims and survivors of clergy abuse to resolve their claims in a fair and timely manner,” said Archbishop Aymond. “Our main priority for victims and survivors is to provide means to facilitate healing from the effects of abuse.” 

Despite the archdiocese consistently stating that filing for bankruptcy was really about prioritizing the needs of victims, again and again throughout the proceedings the church has acted against victims’ best interest. One example of this was the archdiocese’s push to set the bar date as soon as possible to limit how many bankruptcy claims could be filed against the church, actively striving to deny survivors justice. 

When an organization files for bankruptcy a “bar date” is set, which is a date by which all claims must be filed against the organization. Survivors argued that they needed more time, and the judge compromised, setting the bar date for March 1, 2021. 

“The bar date was set way too soon. So, you have victims and survivors who are first off in terrible shape. They get this opportunity, but hey, do it quickly and I’ve talked to victims and survivors and you know what, they can’t,” Windmann explained. “They can’t bring themselves to do the paperwork, they can’t, because it’s so traumatizing for them to actually tell their stories to articulate it in such a way that they will be believed.”

Because of this many, survivors did not file claims for compensation before the bar date deadline, forever losing their right to do so. 400 sexual abuse claims were filed, a number survivors have called “relatively low.” 

Jeff Anderson, an attorney who has represented claimants against all 27 U.S. Catholic dioceses that declared bankruptcy, said that this low number illustrates how bankruptcy protection is “a sinister and effective tool.”

“There is no question that the archdiocese is using Chapter 11 as a … shield to prevent survivors from being able to come forward,” said Anderson. “They (would) face so many more claims in time.”

Especially considering how the archdiocese’s list of credibly accused priests is constantly expanding. The archdiocese only added Henry Brian Highfill to the list right before filing for bankruptcy, despite the fact that there had been credible claims against him for two decades. Some victims believe that Highfill’s name wasn’t added until right before the bankruptcy filing to limit the number of people who came forward with abuse claims against him.

Mark Vath, a survivor, and co-founder of SCSA commented, “As far as the bar date is concerned, this is usually a day by which creditors file to recoup some of their losses from the bankrupting business. It’s not meant to be used when it means a victim (another human being) must come forward and state that an employee of the business raped him/her as a child. It’s just not stuff a bankruptcy attorney should be ruling on. It is most definitely inhumane, illogical, and just plain wrong on so many levels.”

Not only did declaring bankruptcy benefit the church by limiting the number of sex abuse claims filed against it, but this litigation tactic also halted dozens of active sex abuse lawsuits against the church. The archdiocese made a point of legally maneuvering some active state cases to federal court so that they were also halted by the bankruptcy filing. 

While it’s clear that it wasn’t financial issues that fueled the archdiocese declaring bankruptcy, they’ve made a point of letting survivors know that their compensation will be limited. 

A pleading that the archdiocese’s lawyer’s filed relative to a recent motion said, “At the appropriate time, if mediation is not successful, the Debtor will object to all or most of the abuse proofs of claims because, among other things, the vast majority of them are prescribed on their face.” In other words, if survivors don’t take what is offered at mediation then the Archdiocese of New Orleans will completely object to their claims, barring them from any kind of compensation. They believe that they’ll be able to do this because of the lack of proof survivors have and because the statute of limitation has expired on most claims. 

This anecdote also clarifies a point that should already be clear: contradicting the sickly sweet statements of support the Archdiocese of New Orleans has issued on multiple occasions, the archdiocese did not file for bankruptcy to help survivors get justice. 

Why then, did the Archdiocese of New Orleans file for bankruptcy? What was their main motivation? 

The answer: concealing information. 

By filing for bankruptcy the church was able to seal documents, keep the details of sexual abuse cases quiet, and even protect their own officials from testifying. The church filed for bankruptcy two weeks before the long-awaited testimony of Archbishop Aymond in court. 

Attorney Soren Gisleson explained that the bankruptcy filing was all about limiting discoveries about the archdiocese’s conduct around sexual abuse cases. “Its filing was designed to stop Archbishop (Gregory) Aymond’s May 28 deposition and block the publication of thousands of pages of documents. Rather than embrace truth and transparency, the Archdiocese (moved) its campaign of delay and silence to another forum.” 

Hebron noted the exact same thing. “The Archbishop declared bankruptcy, I believe it was two weeks prior to a deposition that was scheduled for him to be deposed. So he avoided that, as well as his attorneys sought to have files sealed, which they were,” Hebron expressed his frustration, “There’s no admission of guilt. There are no records that will be produced. No apologies. That’s the end of it.”

Windmann believes that Aymond testifying could have been crucial for sex abuse advocates. “Archbishop Aymond had been asked to be deposed and also to testify in these cases and he hasn’t. He’s been avoiding it for quite some time. And then when the court finally asks him to testify, two weeks before he did, he filed bankruptcy.” he elaborated, “If he testified, if he was deposed, everybody would know for sure that the Catholic Church has been part of the wholesale, systematic, and organized rape of our children.”

Bankruptcy attorney Jeff Anderson echoed these sentiments, clarifying that for churches who declare bankruptcy the advantages are not only monetary. “They’re not required to come clean with all the histories, and the cover-up of all those histories, of all those offenders,” he said. “And they’re not required to pay anything close to full value on those claims. They all get suppressed or diminished.”

Unfortunately, the main reason that many survivors filed claims against the church was not to gain monetary compensation, but rather to gain access to documents and information the church refused to hand over to them. 

“Knowing the whole truth without limitation is an important part” of sexual abuse survivors’ ability to retake “control of events that caused so much pain they have been forced to carry in silence for so long,” wrote attorneys Richard Trahant, John Denenea, and Soren Gisleson, who are representing dozens of clerical molestation claimants.

“To me, it’s not about the compensation,” McEvoy explained. “I’m not here to live or die broke or rich. I’m here, God left me here for a reason. Because I wanted to commit suicide when I was in my teens and in my twenties because of all this. I want to know the truth. I want to walk in and know that ya’ll didn’t really honor us as kids. As a child, as an altar boy, I shouldn’t have had to go through all this.” 

McEvoy has been disappointed by the church promising to be transparent, but refusing to not only give him information but also acknowledge that he was abused by a church official at a summer school program. 

In a traumatic interview with the church’s attorneys, they tried to assert he was lying. “That literally drove me insane. Because they said I was lying. And they said there was no summer school when the church kept on telling me all these things. They have signed documents, and there was no summer school at church. And now I have signed documents from witnesses that attended summer school with me. So it was very difficult to go through it again.” McEvoy elaborated, “That was a really tough interview I went through with their attorneys. It devastated me. It was like being raped again.”

Sexual abuse survivors feel pessimistic about receiving information on their cases any time soon, although they believe that one day the information may finally be available. “Everything that’s been done will eventually come out.” Windmann asserted, “But here’s the rub on that. The rub on that is we have children that are being molested today, we have children that were molested yesterday, and of course, we have victims and survivors that have been molested for ages, and when I say ages I mean for decades.”

Archbishop Aymond has tried to position sexual abuse in the church as an issue of the past. He made sure to clarify in an informational booklet titled, Renewing Our Commitment, “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.” 

However, believing that there are no longer pedophiles active in an organization that enabled them for countless decades is an ignorant assumption especially considering how little the church has done to atone for its crimes in the past. After all, it was fairly recently that Pat Wittingly was identified for sexually abusing a minor between December 2013 and December 2015. He was finally removed from the ministry in 2020 and arrested. 

The church still refuses to be transparent and to protect community members. Archbishop Aymond has come under fire for withholding information from survivors and the public, including the names of priests who have myriad credible sexual abuse claims against them. 

Again and again, the church has fought tooth and nail to keep information from survivors and the public. Prior to filing for bankruptcy, the Archdiocese of New Orleans was withholding information from a survivor who was sexually abused by Lawrence Hecker. 

The survivor’s attorney asked an Orleans Parish Civil District Court judge to allow for public release of the documents and The Times-Picayune | The New Orleans Advocate, WWL, WDSU, and WVUE joined in the request, arguing that by withholding the information the church was putting community members at risk who could use it to protect themselves against still alive, rapist, pedophile Larry Hecker. By filing for bankruptcy, the archdiocese halted that push for crucial information. 

Church officials first learned that Hecker was raping and assaulting children in 1988, yet he didn’t retire from the ministry until 2002. Although the archdiocese identified Hecker on their list of priests credibly accused of sexual assault, they continued to pay him money for living expenses giving him the financial support of a retired priest. The judge presiding over the archdiocese bankruptcy case had to actually order the “financially struggling” church to stop these payments

This, more than anything else, reveals the church is not sorry. It is explicitly on the side of these rapists and because of that, it will continue to act in ways that traumatize and re-traumatize sexual abuse survivors, denying them justice. While the outlook is grim in regard to the archdiocese’s bankruptcy proceedings, not all hope is lost. 

Zach Hiner, the Executive Director of SNAP wrote, “The only way for true transparency and accountability to happen is through the secular justice system. We know that the Louisiana legislature is considering a bill that would reform the state’s statute of limitations on cases of childhood sex abuse next week, and for the good of survivors, parents, and children, we hope the bill proceeds. Reform like this and investigations from police, prosecutors, and attorneys is the best way to ensure victims receive justice and abuse will be prevented, not through secretive and unnecessary bankruptcy proceedings.”

https://www.bigeasymagazine.com/2021/05/01/investigation-why-did-the-archdiocese-of-new-orleans-declare-bankruptcy1/