MONTPELIER (VT)
VTDigger [Montpelier VT]
July 13, 2026
By Kevin O'Connor
In a sworn statement, a 2020 chief financial job applicant claims the state’s largest religious denomination asked if she’d help “transfer its assets as quickly as possible so that it could file for bankruptcy.”
Two decades after the Vermont Roman Catholic Diocese aimed to protect local parishes from priest misconduct lawsuits by placing their estimated $500 million of holdings into trusts, a recent job applicant alleges the state’s largest religious denomination’s past and current bishops asked if she’d help shelter more funds.
Utah resident Celeste Heinonen was interviewing for the diocese’s post of chief financial officer in 2020 when she felt “shocked” and “sick to my stomach” receiving the inquiry, she said in a U.S. Bankruptcy Court declaration filed this month in the church’s Chapter 11 protection case.
The diocese created trusts in 2006 to shield local parish property and possessions for what it said were “pious, charitable or educational purposes” and not to pay for expenses such as jury verdicts. In 2020, then-Bishop Christopher Coyne went on to voice concern about church holdings tied to its state headquarters in Chittenden County, Heinonen said in a sworn statement.
Coyne “explained that the diocese wanted to transfer its assets” and do so “as quickly as possible so that it could file for bankruptcy,” Heinonen said.
“Bishop Coyne then posed an ‘ethical proposition’ to me and asked if, as CFO, I would be willing to help the diocese prepare the necessary paperwork to ensure that if the diocese lost its lawsuits, there would not be assets left to satisfy the potential judgments,” she continued.
Heinonen said she was “non-committal in my response” and moved on to meet John McDermott, the diocese’s former second-in-command and now bishop after Coyne’s 2023 appointment as archbishop of the Archdiocese of Hartford, Conn.
“McDermott asked how I felt about Bishop Coyne’s proposal, and explained to me that it was important for the diocese to protect its current parishioners and not let the past ‘sins of its fathers’ harm the current parishioners or the diocese,” Heinonen said.
Heinonen left “extremely upset and confused” and ultimately wasn’t offered the job, she said in the declaration. She later contacted Burlington lawyer Celeste Laramie — who is representing several abuse claimants — to share the information and offered no further details in her statement.
Coyne, McDermott, their spokespeople and lawyers declined VTDigger’s requests for comment.
The allegations come as attorneys for the church and clergy abuse claimants are set to fight in court over who should have access to the estimated half-billion dollars in local parish assets.
The diocese filed for Chapter 11 protection in the fall of 2024, arguing that a past series of priest misconduct settlements had reduced its highest-level holdings by half, to about $35 million.
But a committee representing more than 100 clergy abuse claimants has asked for authority to pursue the local parish assets placed in trusts 20 years ago.
“In such litigious times,” then-Bishop Salvatore Matano said in 2006, “it would be a gross act of mismanagement if I did not do everything possible to protect our parishes and the interests of the faithful from unbridled, unjust and terribly unreasonable assault.”
Two decades later, the committee’s attorneys question whether the trusts are illegal under Vermont’s fraudulent deeds law, which bars any move “with intent to avoid a right, debt or duty.”
“The diocese is disguising its ownership of hundreds of millions of dollars of assets by claiming that its parishes and high schools are unincorporated associations,” lawyers for the federally appointed committee wrote in a new court filing. “As a matter of law, the assets of these self-settled trusts are available to satisfy the claims of survivors against the diocese.”
Under federal law, both the court and creditors must approve any Chapter 11 reorganization plan. The committee argues that can’t happen without resolution of the local parish issue.
“To date, the committee and diocese have engaged in numerous mediation sessions without success,” committee lawyers wrote in their latest court filing. “Litigation of the complaint will break the impasse, clarify the scope of the bankruptcy estate, and potentially support recovery of millions of dollars for the benefit of creditors” — and, specifically, abuse survivors.
An attorney for one of the diocese’s insurers, speaking at a Friday court session, said local church leaders should at least be represented in talks as they are in other cases.
“The parishes are typically actively involved in those mediations and need to be because they also have rights under the insurance policies,” said Harris Winsberg, a lawyer for the Interstate Fire & Casualty Company.
Vermont Bankruptcy Judge Heather Cooper has scheduled a hearing on the parish trust question for July 28. In the meantime, she has asked lawyers for all sides to try to mediate their differences by Oct. 16.
“At this point, we have what appears to be a debtor who is not willing or able to corral all of the parties to the table,” Cooper said in court Friday. “Hopefully we will ultimately get to a resolution that is in the best interest of the estate and all of the creditors, but we still have a ways to go, which is a little troubling, considering how far we are along in this.”
The case, approaching its two-year anniversary of filing, has cost the diocese $2 million in legal bills and counting, according to court records.
The diocese — one of 44 U.S. Catholic entities to seek Chapter 11 protection — is trying to reorganize its depleting finances after paying $34.5 million to settle 67 clergy misconduct lawsuits in the past two decades, according to records, only to still face 119 more claims dating as far back as 1950.
Cooper has threatened to dismiss the case if the church doesn’t submit a larger reorganization proposal by fall. Ending the process without a solution would further endanger the diocese’s finances by reviving abuse lawsuits placed on hold by the bankruptcy filing.
Kevin O’Connor
VTDigger’s southern Vermont and features reporter. More by Kevin O’Connor