The Diocese of Camden has become the latest Catholic diocese to declare bankruptcy while facing a mountain of liability from sex abuse claims in New Jersey amid financial struggles that have only been compounded by the coronavirus outbreak.

Diocesan lawyers filed for Chapter 11 bankruptcy protection and reorganization on Oct. 1. The petition said the church is facing an estimated $25.7 million in liabilities from some 200 creditors, including alleged victims of past sex abuse who have made claims against the diocese. The debt also includes a $2.4 million loan the diocese took out in April under the federal government’s Paycheck Protection Program, which was meant to soften the impact of the budget crises created by the pandemic, the Philadelphia Inquirer reported.

“The effects of the pandemic, which have curtailed our revenue and deeply impacted our parishioners and neighbors, were further compounded by the over $8 million we have paid out this year through the New Jersey Independent Victims Compensation Program to victims of clergy abuse, money which we have had to borrow,” Bishop Dennis J. Sullivan said in his announcement of the bankruptcy. “Additionally, the recent repeal of the statute of limitations has resulted in over fifty lawsuits being filed against the diocese involving long-ago claims of abuse”

“If it were just the pandemic, or just the costs of the Victims Compensation Program, we could likely weather the financial impact,” the bishop went on to say. “However, the combination of these factors has made that impracticable.”

The Diocese of Camden serves more than 486,000 Catholics in South New Jersey.

Factors Leading to Diocese of Camden’s Decision

The Independent Victim Compensation Program was established in 2019 by the Roman Catholic church in New Jersey – the Archdiocese of Newark and the dioceses of Camden, Metuchen, Trenton and Paterson – to settle claims of childhood sexual abuse by priests or other members of the clergy.

Bishop Sullivan announced in July the Diocese of Camden, having already paid out $8.1 million to 71 victims through the program, was pulling out of it due to financial constraints exacerbated by the COVID-19 pandemic. A sharp decline in revenue put the diocese in a position where it was unable to continue to borrow money to fulfill the monetary settlements negotiated by the program, he said.

Meanwhile, New Jersey legislators passed a new law that created a two-year waiver of the statute of limitations on bringing civil lawsuits in child sex abuse cases. Beginning in December, victims of childhood abuse who never brought a civil action before, or who did but had their case dismissed because the previous statute of limitations had expired, can file a new lawsuit.

The bankruptcy filing indicated that 52 sex abuse lawsuits have been filed against the Diocese of Camden since the waiver period began.

All of the cases and claims will effectively be on hold while the bankruptcy managers assess the diocese’s situation and the court decides how to reorganization the debt.

According to reporting by the Philadelphia Inquirer, the majority of those who agreed to participate in the victim compensation program rather than take the Diocese of Camden to court are still waiting to have their cases resolved. There are 141 outstanding claims, the paper reported.

Diocese of Camden One of Many to Declare Bankruptcy

The same day the Diocese of Camden filed for bankruptcy, the Diocese of Rockville Centre in New York did the same, for the same stated reasons: an avalanche of sex abuse claims and the financial impact of the coronavirus pandemic. New York also adopted a new child victims law that also opened a new two-year window to past victims wanting to file civil lawsuits.

Rockville Centre, which serves 1.4 million Catholics on Long Island in New York City’s suburbs, said it is facing an estimated $500 million in potential liabilities from sex abuse claims.

In May, the Archdiocese of New Orleans also filed for bankruptcy protection. Before that, it was the dioceses in Syracuse, Rochester and Buffalo in New York, Newsday reported.

“I take some comfort that we are not alone in making this decision, as we have seen that well-known public entities and other Catholic dioceses across the country have been forced recently to do likewise,” Bishop Sullivan said in his official announcement. “This decision is intended to allow for the fair compensation of the victims of abuse, the payment of debts to our creditors, and the safeguarding of the assets which make our religious, educational and social service ministries possible.”

This article is not legal advice. It is presented
for informational purposes only.