A U.S. bankruptcy judge is voicing concern that the Vermont Roman Catholic Diocese has spent nearly two years and $2 million in legal bills to reorganize its depleting finances — yet still lacks a plan.
The state’s largest religious denomination filed for Chapter 11 protection in the fall of 2024 after a past series of priest misconduct settlements reduced its assets by half, to about $35 million. Since then, it has paid more than 5% of its remaining money in fees for its attorneys and for counsel to represent officially recognized creditors, as required by federal law.
On Tuesday, Judge Heather Cooper met behind closed doors in Burlington with all the lawyers to explore ways to make progress and preserve money for creditors, who include more than 100 claimants alleging sexual abuse by clergy.
“My concern is that I don’t want it all going to the professionals,” Cooper told the attorneys at an earlier open hearing. “I do think that the survivors probably would like to have something left over at the end of the day.”
“I appreciate you’re trying to reach something consensually,” the judge continued, “but it’s beyond time for some forward movement.”
Lawyers declined to comment other than to say all sides were continuing to negotiate.
The diocese was supposed to file a Chapter 11 proposal by Jan. 28, 2025, but has extended the deadline repeatedly.
Under the Chapter 11 process, the church has reported $35 million in assets tied to its South Burlington headquarters and state-level holdings. But abuse claimants are seeking records on all local properties the diocese oversees, starting with 63 parishes with an estimated collective worth of $500 million that were placed in trusts in 2006.
Differing opinions on whether the case involves just state or also local assets has led to months of unsuccessful mediation.
“I’ve never had a diocese that had set up separate trusts for each individual parish in order to attempt to shelter those funds from survivors,” Brittany Michael, the lawyer for a federally appointed committee representing creditors with abuse claims, has said in court.
The diocese is continuing administrative operations by cutting its staff workweek to 30 hours and paying expenses with money gleaned from an annual appeal to churchgoers and a tax on the income of its 63 parishes, it reports on its “reorganization” web page.
The church also is working with onetime insurers to learn if former policies would cover any settlement costs.
The diocese has racked up $2.1 million in attorney fees up to this month, court records show.
It has spent $842,262 on its own bankruptcy counsel. The Minnesota-based firm of Fredrikson & Byron, which specializes in business law, has billed for $737,314. As local support, Burlington’s Dinse firm has billed for $53,225, and Bethel lawyer Raymond Obuchowski has billed for $51,722.
The church has paid $1.3 million to three groups who represent abuse claimants and their Official Committee of Unsecured Creditors. The national law firm of Pachulski Stang Ziehl & Jones has billed for $807,041. Assisting, the California-based Berkeley Research Group has billed for $470,603, and the New York state law firm of Lemery Greisler has billed for $26,386, records show.
The diocese — one of 44 U.S. Catholic entities to seek Chapter 11 protection — has paid $34.5 million to settle 67 clergy misconduct lawsuits, according to records, yet still faces 119 more claims dating as far back as 1950.
