The weeks of speculation are over after the Archdiocese of Baltimore on Friday filed for Chapter 11 bankruptcy protection as it faces a potential for child sexual abuse lawsuits.”I recognize that there is no perfect solution here, but looking at the options and consulting many people in the clergy and the laity, I came to the conclusion that this was the best way forward,” Archbishop William Lori told 11 News in an exclusive interview on Friday. “It’s a difficult decision and I’m sure it’s hard news to hear.”This action comes days before a new Maryland law takes effect that eliminates the statute of limitations for victims of sexual abuse to file lawsuits. It also raises a cap on noneconomic damages to $1.5 million per incident, and it does not cap economic or punitive damages.”With the passage of the law last spring in the General Assembly and signed by the governor that eliminated statutes of limitations entirely, civil claims are rising from child sexual abuse, we knew we faced a really difficult situation. We would be likely the recipient of many, many lawsuits, more than we could handle financially,” Lori told 11 News. The archbishop told 11 News that if the archdiocese didn’t file for bankruptcy protection, victim-survivors would sue the church for huge amounts until it runs out of money, leaving others empty-handed.In a letter released Friday, Lori wrote that this action will allow the archdiocese to “equitably compensate” victim-survivors of child sexual abuse and keep the church operating.”I acknowledge that no apology, compensation, or knowledge of our present-day accountability measures will necessarily lead to healing for victim survivors, nor repair the harm they suffered,” Lori wrote in the letter. “Staggering legal fees and large settlements or jury awards for a few victim-survivors would have depleted our financial resources, leaving the vast majority of victim-survivors without compensation, while ending ministries that families across Maryland rely on for material and spiritual support.”Exclusive 11 News video below: Interview with Archbishop LoriLori said the archdiocese expects the bankruptcy court to accept claims from victim-survivors, and a negotiation process will determine how they will be compensated. “We realized if we tried to litigate them individually, that we would very quickly run out of resources. The first few would be compensated but no one else would be compensated,” Lori told 11 News.The archdiocese announced in a letter released earlier in September that church officials were considering filing for bankruptcy.”Nothing goes against what the church believes, teaches, stands for more than abusing a child. Nothing is more antithetical than that, and it’s a painful subject for everybody, most especially for those who have been hurt,” Lori told 11 News.Bankruptcy lawyer explains what this means for survivorsEric Steiner, a lawyer who specializes in bankruptcies, explained to the 11 News I-Team that filing for Chapter 11 bankruptcy, in this case, is likely a strategic move by church officials.”It is often used when the liabilities outweigh the assets, which seems to be the case,” Steiner said. “So, it can be an efficient way to resolve claims, and obviously, the archdiocese is going to want to pay as little as possible versus the creditors that want more. So, really, the court’s job is to balance the interests of both sides.”Steiner said that if the archdiocese is allowed to file for bankruptcy, the details of the agreement will be key. He said the archdiocese will likely try to keep the pot of money for payouts as small as possible. By entering into bankruptcy protection, the archdiocese could avoid future claims for past cases of abuse, if a plan is approved by the bankruptcy court. Steiner said filing for this type of bankruptcy acts as a legal shield for the church. “So, every claim as of a date the archdiocese files for bankruptcy, all claims before that would be cut off,” Steiner said. “What’s called the automatic stay … protects the archdiocese while it’s in bankruptcy. Those claims can no longer be brought in state court or whatever other court. It has to be addressed in the bankruptcy court. The automatic stay is essentially the legal shield. It protects entities, people that file for bankruptcy, and it’s a unique facet of bankruptcy.”Steiner said he would expect the archdiocese to ask the judge overseeing the bankruptcy case to require that each victim-survivor receive the same dollar amount. In the archbishop’s announcement, he used the term “equitably” to describe the payouts three different times. “I think that’s going to depend on what that plan looks like. How much is going to be devoted towards the victims?” Steiner said.Steiner said if the archdiocese’s request to file for bankruptcy protection is approved, a judge will accept claims from victim-survivors for a certain period of time, and the archdiocese will put money into a trust fund for compensation. Steiner said the end result is that the archdiocese will likely have to pay out less money to victim-survivors: “Otherwise, they wouldn’t be filing Chapter 11.”Victim-survivors respondMike McDonnell, the interim executive director of the Survivors Network of those Abused by Priests, released a statement Friday afternoon, saying: “Catholic bishops are employing the same deception from coast to coast. Cover up child sex offenses while maintaining the ministry of the abusers. Next, oppose any modifications to the statute of limitations that might make those offenses more visible. Finally, go to federal bankruptcy courts and act as though you have run out of money when secular laws offer a window to justice. When will church officials make true amends?”At a news conference on Thursday in front of the Baltimore Basilica, adult victim-survivors with SNAP called on others to come forward. The group called out the archbishop for refusing to reveal the names of clergy and church officials that are still secret and for threatening to file for Chapter 11.WBAL-TV 11 News asked the archbishop about the recent report released by the Maryland attorney general that added more names to the list of accused abusers as it related to the archdiocese’s decision to keep some names hidden from the public.”I think the point here is that while we certainly support the release of the attorney general’s report, these individuals were not abusers, but made decisions, but were never approached by the attorney general’s office, never given any opportunity to share their side of the story, not even notified, to tell you the truth, and they themselves decided they wanted a fear of process, and that’s why they have litigated. I think their claim is valid and that’s why we support it,” Lori told 11 News.SNAP members called the church’s bankruptcy talk a ploy.”What the diocese is doing by filing for bankruptcy is effectively short-circuiting the will of the Maryland Legislature and the people of Maryland. That should have a chilling effect, the fact that they are working their way around the will of the people,” David Lorenz, with Maryland SNAP, said Thursday.The archbishop told 11 News that filing for bankruptcy protection is neither a ploy nor an attempt to undermine legislation. He said there is no perfect solution but found it to the best path forward.”It is not a workaround. If we were to litigate, only a few victim-survivors could be compensated,” Lori told 11 News. “In spite of what you might read or hear, the resources of the church really are finite. They are not unlimited. What we do have, we are using for ministries, to educate the young, to support our parishes, using them to do charity that extends far beyond the church that many in our community depend upon.”On its website, the Archdiocese of Baltimore noted that 25 diocese and seven archdioceses have filed for Chapter 11 bankruptcy across the country. The Catholic Diocese of Harrisburg has already filed for Chapter 11 protection. In that case, church officials set aside $7.5 million in a trust fund, insurers kicked in another $11 million and a trust administrator handled the money.
The weeks of speculation are over after the Archdiocese of Baltimore on Friday filed for Chapter 11 bankruptcy protection as it faces a potential for child sexual abuse lawsuits.
“I recognize that there is no perfect solution here, but looking at the options and consulting many people in the clergy and the laity, I came to the conclusion that this was the best way forward,” Archbishop William Lori told 11 News in an exclusive interview on Friday. “It’s a difficult decision and I’m sure it’s hard news to hear.”
This action comes days before a new Maryland law takes effect that eliminates the statute of limitations for victims of sexual abuse to file lawsuits. It also raises a cap on noneconomic damages to $1.5 million per incident, and it does not cap economic or punitive damages.
“With the passage of the law last spring in the General Assembly and signed by the governor that eliminated statutes of limitations entirely, civil claims are rising from child sexual abuse, we knew we faced a really difficult situation. We would be likely the recipient of many, many lawsuits, more than we could handle financially,” Lori told 11 News.
The archbishop told 11 News that if the archdiocese didn’t file for bankruptcy protection, victim-survivors would sue the church for huge amounts until it runs out of money, leaving others empty-handed.
In a letter released Friday, Lori wrote that this action will allow the archdiocese to “equitably compensate” victim-survivors of child sexual abuse and keep the church operating.
“I acknowledge that no apology, compensation, or knowledge of our present-day accountability measures will necessarily lead to healing for victim survivors, nor repair the harm they suffered,” Lori wrote in the letter. “Staggering legal fees and large settlements or jury awards for a few victim-survivors would have depleted our financial resources, leaving the vast majority of victim-survivors without compensation, while ending ministries that families across Maryland rely on for material and spiritual support.”
Exclusive 11 News video below: Interview with Archbishop Lori
Lori said the archdiocese expects the bankruptcy court to accept claims from victim-survivors, and a negotiation process will determine how they will be compensated.
“We realized if we tried to litigate them individually, that we would very quickly run out of resources. The first few would be compensated but no one else would be compensated,” Lori told 11 News.
The archdiocese announced in a letter released earlier in September that church officials were considering filing for bankruptcy.
“Nothing goes against what the church believes, teaches, stands for more than abusing a child. Nothing is more antithetical than that, and it’s a painful subject for everybody, most especially for those who have been hurt,” Lori told 11 News.
Bankruptcy lawyer explains what this means for survivors
Eric Steiner, a lawyer who specializes in bankruptcies, explained to the 11 News I-Team that filing for Chapter 11 bankruptcy, in this case, is likely a strategic move by church officials.
“It is often used when the liabilities outweigh the assets, which seems to be the case,” Steiner said. “So, it can be an efficient way to resolve claims, and obviously, the archdiocese is going to want to pay as little as possible versus the creditors that want more. So, really, the court’s job is to balance the interests of both sides.”
Steiner said that if the archdiocese is allowed to file for bankruptcy, the details of the agreement will be key. He said the archdiocese will likely try to keep the pot of money for payouts as small as possible.
By entering into bankruptcy protection, the archdiocese could avoid future claims for past cases of abuse, if a plan is approved by the bankruptcy court. Steiner said filing for this type of bankruptcy acts as a legal shield for the church.
“So, every claim as of a date the archdiocese files for bankruptcy, all claims before that would be cut off,” Steiner said. “What’s called the automatic stay … protects the archdiocese while it’s in bankruptcy. Those claims can no longer be brought in state court or whatever other court. It has to be addressed in the bankruptcy court. The automatic stay is essentially the legal shield. It protects entities, people that file for bankruptcy, and it’s a unique facet of bankruptcy.”
Steiner said he would expect the archdiocese to ask the judge overseeing the bankruptcy case to require that each victim-survivor receive the same dollar amount. In the archbishop’s announcement, he used the term “equitably” to describe the payouts three different times.
“I think that’s going to depend on what that plan looks like. How much is going to be devoted towards the victims?” Steiner said.
Steiner said if the archdiocese’s request to file for bankruptcy protection is approved, a judge will accept claims from victim-survivors for a certain period of time, and the archdiocese will put money into a trust fund for compensation.
Steiner said the end result is that the archdiocese will likely have to pay out less money to victim-survivors: “Otherwise, they wouldn’t be filing Chapter 11.”
Victim-survivors respond
Mike McDonnell, the interim executive director of the Survivors Network of those Abused by Priests, released a statement Friday afternoon, saying: “Catholic bishops are employing the same deception from coast to coast. Cover up child sex offenses while maintaining the ministry of the abusers. Next, oppose any modifications to the statute of limitations that might make those offenses more visible. Finally, go to federal bankruptcy courts and act as though you have run out of money when secular laws offer a window to justice. When will church officials make true amends?”
At a news conference on Thursday in front of the Baltimore Basilica, adult victim-survivors with SNAP called on others to come forward. The group called out the archbishop for refusing to reveal the names of clergy and church officials that are still secret and for threatening to file for Chapter 11.
WBAL-TV 11 News asked the archbishop about the recent report released by the Maryland attorney general that added more names to the list of accused abusers as it related to the archdiocese’s decision to keep some names hidden from the public.
“I think the point here is that while we certainly support the release of the attorney general’s report, these individuals were not abusers, but made decisions, but were never approached by the attorney general’s office, never given any opportunity to share their side of the story, not even notified, to tell you the truth, and they themselves decided they wanted a fear of process, and that’s why they have litigated. I think their claim is valid and that’s why we support it,” Lori told 11 News.
SNAP members called the church’s bankruptcy talk a ploy.
“What the diocese is doing by filing for bankruptcy is effectively short-circuiting the will of the Maryland Legislature and the people of Maryland. That should have a chilling effect, the fact that they are working their way around the will of the people,” David Lorenz, with Maryland SNAP, said Thursday.
The archbishop told 11 News that filing for bankruptcy protection is neither a ploy nor an attempt to undermine legislation. He said there is no perfect solution but found it to the best path forward.
“It is not a workaround. If we were to litigate, only a few victim-survivors could be compensated,” Lori told 11 News. “In spite of what you might read or hear, the resources of the church really are finite. They are not unlimited. What we do have, we are using for ministries, to educate the young, to support our parishes, using them to do charity that extends far beyond the church that many in our community depend upon.”
On its website, the Archdiocese of Baltimore noted that 25 diocese and seven archdioceses have filed for Chapter 11 bankruptcy across the country. The Catholic Diocese of Harrisburg has already filed for Chapter 11 protection. In that case, church officials set aside $7.5 million in a trust fund, insurers kicked in another $11 million and a trust administrator handled the money.
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