The Archdiocese of New Orleans will ask “parishes, schools, and ministries” for monetary contributions in order to protect their assets during the archdiocese’s bankruptcy proceedings, which came about in part because of abuse lawsuits, Archbishop Gregory Aymond announced in a Sept. 8 letter.
The New Orleans Archdiocese filed for Chapter 11 bankruptcy in 2020.
At the time, the archdiocese said the filing would “not affect individual church parishes, their schools, schools run by the various religious orders, or ministries of the Church.”
“When we filed for Chapter 11 reorganization in 2020, I was advised by legal counsel that the Chapter 11 proceedings would only impact our administrative offices and not the apostolates —parishes, schools, and ministries — of the Archdiocese of New Orleans,” Aymond wrote in his recent letter.
“Unfortunately, this is no longer the case because of many external factors now facing us including the fact that the law governing the statute of limitations has changed to now permit the filing of past abuse claims in civil court.”
Louisiana followed the example of at least 18 other states before it when it opened, in 2021, a three-year “window” during which survivors of child sexual abuse could file lawsuits against their alleged abuser, even when the statute of limitations would normally impede such lawsuits.
Some states — including Maine and Vermont — have opened “permanent windows” on their statutes of limitations to allow alleged victims to bring claims forward no matter when the alleged abuse occurred.
The opening of Louisiana’s window has led to a total of more than 500 abuse claims filed against the archdiocese with the bankruptcy court, up from around 30 at the time of the bankruptcy filing, Aymond noted. To navigate the new situation, Aymond said the archdiocese is seeking what is known as a “channeling injunction.”
“Simply put, a channeling injunction prevents someone who receives a settlement in bankruptcy from suing one of the apostolates for the same incident and protects them from being sued after the bankruptcy is settled,” Aymond explained.
“In order to accomplish that, we now know that there must be a contribution from the apostolates.”
Aymond said it is not yet known what that total contribution will be, or what will be asked of each entity.
Marie T. Reilly, a professor of law at Penn State Law at Penn State University, told CNA that channeling injunctions are not an uncommon feature of diocesan bankruptcies in the U.S. and are in fact “pretty typical.” The channeling injunction, she said, will likely require all the archdiocese’s parishes to contribute monetarily, even the many parishes without any clergy accused of abuse.
The channeling injunction, as its name implies, “channels” all abuse claims, meaning they will all be paid out from a single settlement trust. This trust, from which victims receive their payments, is generally funded by three sources: the archdiocese itself, insurance money, and contributions from parishes and ministries.
For example, she said, St. Paul and Minneapolis’ bankruptcy proceedings, which took place from 2015–2018, culminated in a large settlement trust that was funded in part by a “substantial contribution” from parishes. A source close to the archdiocese told CNA in 2018 that the settlement amount reached was $210 million.
Reilly said dioceses across the country have argued that it is a better deal for creditors to accept settlement trusts partially funded by all the dioceses’ parishes, rather than — as some creditors will do — pushing for a complete liquidation of the diocese’ assets.
In addition to providing information about the channeling injunction, Aymond said the archdiocese is working to “reduce the number of properties owned by the Archdiocese of New Orleans and our apostolates.”
“Soaring insurance rates and costly maintenance have impacted our ability to maintain appropriately the over 1,400 pieces of property and remain good stewards of our resources. This work will be a very important factor to determining contributions asked of the apostolates as well,” he said.
Aymond concluded by stating that he remains committed to ensuring the majority of the settlement trust is paid with the assets of the Archdiocese of New Orleans — including real estate sales — and its insurers.
“Through these efforts and by the grace of God, we will emerge better prepared for the future and be an even stronger Catholic family,” the 73-year-old Aymond concluded.
“In closing, please know that I pray for you, the faithful of our Archdiocese of New Orleans, every day. Again, I ask for your prayers for our clergy, religious, lay staff, and those who are working to support us during this challenging time. I humbly ask too for prayers for me as we together ask the Holy Spirit to guide this process to a just conclusion.”
More than two dozen U.S. dioceses, including two in U.S. overseas territories, have entered into bankruptcy proceedings, the vast majority in the past decade. Many dioceses have cited the high cost of settling abuse claims as a major factor in the decision to declare bankruptcy.
Reilly said that in several of the 24 U.S. states and three territories that have temporarily “revived” the statute of limitations on claims of abuse, multiple Catholic dioceses have been forced to declare bankruptcy amid a mounting number of new abuse claims brought to light during the statute of limitations “revival windows.”
In New York, which opened a two-year window for old abuse claims to be filed in August 2019, six of the state’s eight dioceses have declared bankruptcy, all since 2019.