Archdiocese: Bankruptcy filing for good of church, victims and survivors; abuse claimants skeptical

By Ramon Antonio Vargas
May 01, 2020

New Orleans Archbishop Gregory Aymond talks with | The Times Picayune at the archdiocese office on Walmsley Ave. in New Orleans, La. Wednesday, March 27, 2019.
Photo by David Grunfeld

Archbishop Gregory Aymond, facing the mounting financial toll of the Catholic church’s child sexual-abuse crisis and the more acute money troubles wrought by the coronavirus, filed the paperwork early Friday morning to seek bankruptcy protection for the Archdiocese of New Orleans.

Aymond, the leader of the two-century old archdiocese serving half a million area Catholics, broke the news in person to dozens of mask-wearing clergy Thursday evening at a Metairie church before officially submitting the documents to federal bankruptcy court a little after midnight.

On Friday, he told the faithful that the filing for Chapter 11 bankruptcy petition is aimed at putting the archdiocese on sounder financial footing in the wake of millions of dollars in abuse claims.

“It’s been a challenging time — it’s been a difficult time — but the decision we have made … is for the good of the church, the victims and survivors,” Aymond said in an interview.

He and other church officials pledged that little if anything would change for parishioners, Catholic school students and others with connections to parishes and church services.

Parish churches, schools, housing agencies and other ministries are incorporated separately from the archdiocese, and neither their operations nor their funds are expected to be impacted in a process still in its earliest stages, Aymond and Vicar General of Finance Patrick Carr said during an interview at the archdiocese Friday.

“We will carry on our normal course of activities,” Carr added.

The archdiocese is now one of 27 dioceses or religious orders out of 200-plus in the U.S. to seek bankruptcy protection amid the sexual-abuse crisis.

The move took locals by surprise and led many of the church’s most ardent critics — the advocates for victims of molestation by Catholic priests and clergy — to decry the bankruptcy petition as a way to shield the church from making financial amends.

In a statement, leaders of the Survivors Network of Those Abused by Priests contended that bankruptcy proceedings derail discovery “of exactly who enabled abuse, and how.”

“This decision is not good for survivors nor today’s Catholics because living predators can remain hidden, their enabler still in power,” read the statement from SNAP leaders Kevin Bourgeois, Richard Windmann and Zach Hiner.

The filing halts unresolved priest abuse claims at least temporarily as the bankruptcy process winds its way through the courts, though survivors’ advocates vowed to oppose any efforts from the archdiocese to use the case to minimize the amount of potential compensation.

They also said they would keep fighting for records outlining predatory priests’ crimes and church leaders’ handling of them.

Aymond on Friday spoke frankly about how the archdiocese began contemplating seeking Chapter 11 protection months ago, as the pace of claims involving the Catholic Church’s lingering clergy sex abuse scandal remained steady and costs stemming from litigating those cases mounted.

That exacerbated other budget problems. The archdiocese had posted millions of dollars in annual operating losses for years. The prolonged shutdown of church services following the coronavirus pandemic last month dealt another blow to the church’s coffers.

Aymond said he consulted with advisers, clergy, staff and attorneys at the Jones Walker law firm. The archdiocese’s board of directors resolved roughly a week earlier to petition for bankruptcy, launching a process that will likely take more than a year to unfold.

Aymond on Friday pushed back against insinuations that the bankruptcy’s primary aim was to gum up some unresolved abuse lawsuits which could turn up unflattering evidence or could be costly. In one recent case, church attorneys acknowledged having paid four settlements since 1988 to alleged molestation victims of a priest who has continued receiving financial support from the archdiocese.

Another lawsuit linked the church’s handling of abuse scandal fallout and executives of the New Orleans Saints and Pelicans sports teams. Attorneys for the victims said that the franchises, both headed by devout Catholic Gayle Benson, gave free public relations services to Aymond as he prepared to release a November 2018 list of suspected predator priests and deacons.

Aymond said he sought the protections to provide “just compensation” and healing to abuse survivors. He said spending years litigating with several claimants who are pushing for trials rather than mediating settlements would interfere with the church’s ministry of spreading the Gospel.

While parish payments, through assessments and self-insurance premiums, represent the largest source of funds for the archdiocese, Aymond and Carr insisted the payment of abuse claims would not come from parish funds and would instead be generated from sources such as insurance, investments, and oil and gas royalties.

If it came to it, the archdiocese said it could sell unused land and buildings, which it did after Aymond’s predecessor — Archbishop Alfred Hughes — ordered the closures of several churches and mergers of others during a streamlining plan following Hurricane Katrina-related hardships.

Aymond and Carr also said other funds are restricted from being used for such purposes. They said leaders of individual, separately incorporated parishes and schools — a few of whom received federal payroll aid amid the pandemic — would still control their monies for parish needs.

They pledged that teachers and other lay staff did not have to worry that their retirements would be raided to pay off creditors, including investors of $38 million in state facilities bonds that helped the archdiocese’s post-Katrina rebuild.

Several other creditors involve insurance and worker health claims, in addition to outside legal counsel and employment benefit administrative services.

The list of the archdiocese’s 20 largest creditors does not mention any abuse claims, though the archdiocese last year said it had put aside $8.5 million for that purpose.

When asked about a $42 million unfunded pension obligation to diocesan priests, Aymond and Carr cited moral and church-mandated duties to pay their retired clergymen.

The archdiocese’s bankruptcy petition lists between $100 million and $500 million in assets and liabilities in the same range of amounts. It also claims between 10,000 and 25,000 total creditors.

Perhaps unsurprisingly, Aymond’s explanations for the bankruptcy did not play well with those advocating for abuse claimants.

A statement issued by attorneys Richard Trahant, John Denenea and Soren Gisleson — whose clients have pressed for trials — dismissed Aymond’s remarks about prioritizing just compensation for victims as hollow.

They said the archdiocese has spent “ungodly amounts of money” trying to keep records on abusive priests and their bosses private.

Having learned the archdiocese retained bankruptcy counsel, the plaintiffs’ lawyers sent a letter 10 days earlier asking the archdiocese to discuss what that process might look like in order to prepare their clients — but never received a reply.

“Aymond’s actions through his lawyers speak much louder than his lip service to the media,” they said.



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