New Jersey Catholic diocese’s $87.5 mln abuse settlement approved

Reuters [London, England]

March 14, 2024

By Dietrich Knauth

Deal had been held up by insurance concerns

A U.S. bankruptcy judge on Thursday approved the Diocese of Camden’s Chapter 11 bankruptcy plan, allowing the New Jersey diocese to move ahead with a $87.5 million settlement of sex abuse lawsuits.

The diocese initially had agreed to settle with about 300 sex abuse victims in April 2022, but the deal had been held up in bankruptcy court over objections raised by the diocese’s insurers. U.S. Bankruptcy Judge Jerrold Poslusny said at a Thursday court hearing in Camden that recent changes to the deal had resolved all of the insurance-related issues.

The bankruptcy settlement was supported by more than 97% of the abuse claimants who voted on it.

Bishop Dennis Sullivan said in a Thursday statement that the approval would allow the diocese to move on from a “painful” three-year bankruptcy restructuring and “provide substantial reparations to survivors harmed by sinful priests dating back more than six decades.”

“My prayers go out to all survivors of abuse, and I pledge my continuing commitment to ensure that this terrible chapter in the history of the Diocese of Camden, New Jersey, never happens again,” Sullivan said.

Insurers had argued that the bankruptcy plan would create a settlement trust that was “biased” against insurers and could allow for the payment of inflated, invalid or fraudulent claims, in addition to excessive attorneys’ fees.

Poslusny initially agreed with the insurers and rejected an earlier version of the settlement. But he said the revised plan gave insurers the ability to defend themselves in court if the settlement trust tried to sue them for coverage without fulfilling its obligations under the diocese’s insurance policies. Those obligations may include payment of the initial legal defense costs before insurance coverage kicks in, as well as requirements to cooperate with insurers to defend against claims Poslusny said.