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Vermont Diocese Seeks to Withdraw from Bankruptcy
Confirmed
In Short: The Diocese of Burlington, Vermont, has moved to withdraw its Chapter 11 bankruptcy filing, citing mounting legal costs and lack of progress.
The Diocese of Burlington, Vermont, has filed a motion to withdraw its Chapter 11 bankruptcy filing, two years after it initially sought relief to address sexual abuse claims.
Bishop John McDermott cited a lack of progress in the case, mounting legal fees, and the recent adversarial move by the creditors’ committee to include parishes and schools in the settlement.
According to Bishop McDermott, the diocese's legal and administrative expenses in the proceedings have already exceeded $2 million, with no funds awarded to claimants.
Bishop McDermott stated, 'I believe the Diocese has made a good faith effort to resolve this process in a timely and just manner. Unfortunately, our best offer was not accepted.'
The diocese noted that mediation and arm’s-length negotiations failed to yield the necessary compromises to achieve a global resolution.
The motion to dismiss the filing highlights the significant expense of Chapter 11 filings by dioceses and the issue of determining the extent to which parishes, schools, and affiliated Catholic entities may be held financially liable in settling abuse claims.
The diocese said in its filing that there was 'no end in sight' to the costs of pursuing its Chapter 11 filing, adding that such fees 'are consuming resources that would otherwise be available' to compensate survivors and other creditors, as well as the diocese’s own operations.
Prior to the filing, the diocese had settled 20 cases for a total of more than $4.5 million using both regular operating funds and unrestricted investments.
At the time of its bankruptcy filing, the Diocese of Burlington faced 31 lawsuits, with the number exceeding 100 by 2025.
A hearing on the diocese’s motion to withdraw is scheduled for December.
Bishop McDermott said he hopes the additional time will allow the diocese and the committee representing claimants to continue negotiations and reach a settlement.
The diocese has also cut its employee base by half and reduced expenditures while seeking to sell additional properties to fund a trust for claimants.
What this adds
The case highlights the financial strain and prolonged negotiations faced by dioceses in addressing sexual abuse claims through bankruptcy proceedings.
What's confirmed
- A hearing on the diocese’s motion is scheduled for Dec.
What's still developing
- According to its filing, the diocese didn’t take this decision lightly, but two years of failed negotiations leaves the organization little choice.
- Since filing two years ago, the Vermont Catholic Church’s bankruptcy has developed into multiple overlapping legal battles that could have ramifications across the state for the church’s faithful.
- This would’ve nearly doubled the amount paid by the diocese in settlements so far, as it has paid roughly $35 million to settle previous misconduct lawsuits.