Clergy abuse claimants have asked a court to allow them to pursue an estimated half-billion dollars in local parish assets as part of the Vermont Roman Catholic Diocese’s current bankruptcy case.
The state’s largest religious denomination filed for Chapter 11 protection in the fall of 2024, arguing that a past series of priest misconduct settlements had reduced its highest-level holdings by half, to about $35 million.
But a committee representing more than 100 clergy abuse claimants has filed papers in U.S. Bankruptcy Court in Burlington seeking access to the worth of the property and possessions of nearly 70 local parishes — assessed at a collective value of around $500 million — that the diocese placed in trusts in 2006.
“The diocese transferred approximately hundreds of millions in assets to fund the parish trusts, and did so expressly for the purposes of shielding those assets from survivor claims,” Brittany Michael, the lawyer for the federally appointed committee, wrote in a 67-page court filing released Thursday. “These extraordinary transfers should be available to creditors.”
Under federal law, both the court and creditors must approve any Chapter 11 reorganization plan. Abuse claimants say access to parish assets should be part of any proposal.
“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,” Michael told the court in an earlier hearing.
The diocese — one of 44 U.S. Catholic entities to seek Chapter 11 protection — is trying to reorganize its depleting finances after paying $34.5 million to settle 67 clergy misconduct lawsuits in the past two decades, according to records, only to still face 119 more claims dating as far back as 1950.
Former Bishop Salvatore Matano placed each local parish into an individual trust 20 years ago in an attempt to protect the assets. To do so, church lawyers attached two-page form letters onto deeds to note that holdings can only be tapped for “pious, charitable or educational purposes” and not to pay for other expenses such as jury verdicts.
“In such litigious times, it would be a gross act of mismanagement if I did not do everything possible to protect our parishes and the interests of the faithful from unbridled, unjust and terribly unreasonable assault,” Matano wrote in a 2006 letter to Catholics.
Attorneys for abuse claimants question whether the transfers broke Vermont’s fraudulent deeds law, which bars any move “with intent to avoid a right, debt or duty.”
A court has yet to consider the issue.
The latest action promises to further complicate a bankruptcy case that, approaching its two-year anniversary of filing, has cost $2 million in legal bills and counting.
To raise money, the diocese is selling its South Burlington headquarters for $3.13 million, court records show. But Judge Heather Cooper has given the church until September to submit a larger reorganization proposal or face the end of the process.
“The court anticipates a proposed plan, conversion, or dismissal,” she wrote in a recent order.
Ending the case without a solution would further endanger the diocese’s finances by reviving abuse lawsuits placed on hold by the bankruptcy filing.
