First Catholic Diocese in Pennsylvania Declares Bankruptcy

Date : 02/19/2020 @ 8:10PM
Source : Dow Jones News

First Catholic Diocese in Pennsylvania Declares Bankruptcy

By Ian Lovett 

The Catholic Diocese of Harrisburg filed for bankruptcy Wednesday, making it the first in Pennsylvania to seek chapter 11 protection after the state attorney general released a grand-jury report detailing decades of clergy sexual abuse of children.

Since that report, which included more than 1,000 cases of clergy abuse dating to the 1940s, the state has received hundreds more reports from people claiming they were abused by priests.

In addition, attorneys general in more than a dozen other states have opened investigations into Roman Catholic dioceses, and a handful of states have changed statutes of limitations laws to make it easier for people who say they were abused by clergy many years ago to sue. Pennsylvania hasn't taken such a step

However, a state appeals court ruled last year that a case accusing the Altoona-Johnstown diocese of a conspiracy to cover up abuse could go forward, despite the statute of limitations. The case is on appeal, but in the meantime similar cases have been filed all over the state, including in Harrisburg.

"That was a game-changer for us," said Matthew Haverstick, a lawyer representing the Harrisburg diocese.

In its bankruptcy filing, the diocese estimated its financial liabilities at between $50 million and $100 million and its assets at no more than $10 million. The diocese has at least 200 creditors, according to the filing.

Like six of the seven other dioceses in Pennsylvania, Harrisburg has a program to financially compensate alleged victims of abuse. By the end of last year, it has paid out more than $12 million to 110 alleged victims, the lawyer said. Those who accepted settlements are barred from suing the church.

Such programs are designed in part to limit dioceses' legal costs. However, membership and collections have been shrinking for years in Harrisburg, as in many other northeastern Catholic dioceses, Mr. Haverstick said, increasing financial pressure.

Harrisburg is the 21st Catholic diocese nationwide to file for bankruptcy since 2004, when sexual-abuse lawsuits against the church began to mount.

Terry McKiernan, of the watchdog website Bishop Accountability, said the bankruptcy was another result of the attorney general's report in 2018. "Catholic dioceses over the years have used bankruptcy as a way of controlling" the costs of sexual abuse lawsuits, he said. "It's a strategy."

With jurisdictions around the U.S. taking steps to make it easier for alleged victims of abuse from decades ago to sue, Mr. Haverstick said he expected many other dioceses would soon follow Harrisburg into bankruptcy. The Diocese of Rochester filed for bankruptcy last year, shortly after a New York state law that temporarily lifted the statute of limitations on child sexual abuse took effect. The Boy Scouts of America, which has also faced a flood of sexual- abuse lawsuits in recent years, filed for bankruptcy Tuesday.

"This is the beginning of a trend for the Catholic church and for nonprofit charities," Mr. Haverstick said. "Just like investigations after the Pennsylvania report started to run across the country, I think the next thing that will spread across the country is diocesan bankruptcies."

Write to Ian Lovett at Ian.Lovett@wsj.com

 

(END) Dow Jones Newswires

February 19, 2020 14:55 ET (19:55 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.


Your Recent History
LSE
GKP
Gulf Keyst..
LSE
QPP
Quindell
FTSE
UKX
FTSE 100
LSE
IOF
Iofina
FX
GBPUSD
UK Sterlin..
Stocks you've viewed will appear in this box, letting you easily return to quotes you've seen previously.

Register now to create your own custom streaming stock watchlist.


NYSE, AMEX, and ASX quotes are delayed by at least 20 minutes.
All other quotes are delayed by at least 15 minutes unless otherwise stated.