What’s the Real Reason the Archdiocese of New Orleans Declared Bankruptcy?

“It’s not a matter of money. This is a matter of secrecy, a matter of silencing.”

On May 1, 2020, the Archdiocese of New Orleans filed for Chapter 11 reorganization. Since filing, the archdiocese has not been entirely honest about the real reason that they declared bankruptcy.

When asked for a statement on why they declared bankruptcy, a spokeswoman for the archdiocese forwarded along a press release and informational booklet, commenting that “As this is a legal proceeding pending before the federal bankruptcy court, we think it is imprudent to comment further.”

The press release explained, “In order to continue effectively ministering to the needs of the church community and victims and survivors of clergy abuse, the Administrative Offices of the Archdiocese of New Orleans announced today that it has filed for Chapter 11 reorganization. The move was necessitated by the growing financial strain caused by litigation stemming from decades-old incidents of clergy abuse as well as ongoing budget challenges. The unforeseen circumstances surrounding COVID-19 have added more financial hardships to an already difficult situation.”

Elaborating on this reasoning, Archbishop Gregory Aymond wrote, “The prospect of more abuse cases with associated prolonged and costly litigation, together with pressing ministerial needs and budget challenges, is simply not financially sustainable.”

What Aymond is referencing is the recent surge in sexual abuse claims after he finally released a list of 57+ church officials who had been credibly accused of assaulting and raping minors.

The list’s publication emboldened victims to speak up and even led to some recovering repressed memories of their trauma at the hands of the listed Catholic officials. Since its initial publication, the roster has expanded many times, leading to even more people filing claims against the church.

Through statements and documents, the archdiocese has cited “financial struggles” as a result of the surge in claims as the primary reason why it filed for bankruptcy. However, it was revealed that the church actually is solvent, meaning it’s capable of paying all its legal debts. It’s very uncommon, although it’s not illegal, for a solvent organization to declare bankruptcy.

The archdiocese has confirmed that it has hundreds of millions of dollars in assets and liabilities. These assets include a $306 million endowment along with $77 million worth of land and buildings. Liabilities on the other hand are a measly $38 million in bonds, $500,000 in employee health claims, and the $8.5 million set aside for abuse-related claims.

In a letter to the Vatican, sent two days before the archdiocese filed for bankruptcy, it was uncovered that Archbishop Aymond revealed that the church was solvent and financially more than capable of handling the claims. He wrote, “The archdiocese is not insolvent. We have sufficient cash, cash equivalents, and investments to cover 100 percent of our liabilities.” Liabilities include abuse-related claims.

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