NEW ORLEANS — The Archdiocese of New Orleans announced Friday that it is seeking federal Chapter 11 bankruptcy protection amid growing legal costs related to sexual abuse by priests.
The filing for reorganization could free the archdiocese from the threat of creditors’ lawsuits while it reorganizes its finances. The New Orleans archdiocese is the latest of more than 20 dioceses nationwide to take such action.
Friday’s statement said costs associated with preventing the spread of coronavirus also have contributed to financial pressures.
The archdiocese said the filing applies only to the administrative offices of the archdiocese. “The Archdiocese’s action will not affect individual church parishes, their schools, schools run by the various religious orders, or ministries of the church,” the statement said.
It added that the archdiocese and other institutions would continue with its usual daily ministry.
The statement said the filing will give the archdiocese time to develop a plan for settling claims using its assets and insurance.
“This reorganization will also allow the Archdiocese to address remaining clergy abuse cases in a way that will allow funds to go directly to victims instead of funding prolonged, costly litigation,” Friday’s statement said.
Kevin Bourgeois, of the New Orleans chapter of Survivors Network of those Abused by Priests, called the filing “an act of cowardice” by church leaders, including Archbishop Gregory Aymond.
“The overriding question is not one of legality, but one of morality. The FBI and the US Attorney should investigate the ﬁnances of this organization as they ﬁle for Chapter 11 protection,” Bourgeois said in an emailed statement.
Friday’s filing includes a form saying the archdiocese assets are between $100 million and $500 million, with liabilities in the same range. The Times-Picayune/The New Orleans Advocate have reported, based on earlier court filings, that church assets include a $306 million endowment and $77 million in land and buildings.
Bourgeois said he believes the archdiocese’s assets “far outweigh” liabilities.
In 2018, the archdiocese released a list identifying more than 50 clergy members removed from the ministry over the years due to “credible accusations” of sexual abuse. There have been numerous lawsuits filed in state court over alleged abuse. Details of some have been made public, including those involving a defrocked deacon, named in several lawsuits resulting in $500,000 in settlements.