US bankruptcy laws give unintended advantages to churches: SNAP urges Federal action

For Immediate Release, December 6, 2023

An insightful article, published in The Guardian and authored by Louisiana journalist Jason Berry, points out that in bankruptcy court, religious institutions get all the relief the process affords, but have advantages other debtors do not enjoy. Sadly, in the bankruptcies filed by entities like the Catholic Church, the law is being used to protect institutions that covered up child sex abuse. 

SNAP, the Survivors Network of those Abused by Priests, believes that in the interest of safeguarding today’s boys and girls, the United States government must close this loophole. As SNAP Board Member Dan McNevin pointed out in The Guardian piece, “These bankruptcies are saving dioceses from ever coming clean.” Dan wants the Church to list the names of all of the accused, as a form of “contrition.” The bankruptcy process does not lend itself to those disclosures.

While the Archdiocese of Santa Fe, New Mexico, agreed to release its clergy abuse files publicly as part of that bankruptcy settlement, Santa Fe is the exception rather than the rule. Documents in the Milwaukee bankruptcy were sealed in 2016. A request from the state attorney general to release those records in 2018 is still being litigated.

The New Orleans bankruptcy is perhaps the worst-case scenario. The judge in that proceeding has not only kept the information sealed, she chose a “nuclear option” in 2022, when a local Catholic school was warned about an accused priest who was working there. In response, the judge removed three plaintiff attorneys from the creditor committee, as well as their four clients/survivors. She also fined the lawyer who had issued the warning to the school's principal $400,000. The fine is currently under appeal. The FBI has been investigating Catholic cases in Louisiana for more than a year, though how much information it has actually obtained from the Church is unclear.

Child predators rarely, if ever stop, without outside intervention. The Catholic Church is a prime example of a religious institution that has protected its perpetrators from criminal prosecution for decades. Unfortunately, SCOTUS ruled in the Stogner case that criminal statutes of limitations cannot be changed retroactively. Yet the Catholic Church has impeded current criminal investigations in Wisconsin, and perhaps in Louisiana as well.

As a work-around to the US Supreme Court ruling on criminal law, states have expanded or removed their civil statutes of limitation. Some, like Louisiana, California, and New York, have open civil windows to help protect children by allowing victims to pursue lawsuits, despite fierce opposition from the Catholic Church. Even today, dioceses in Louisiana are challenging that state’s look-back legislation.

When legal challenges to civil windows fail, as they did in California, Catholic dioceses have fled to the protection of the bankruptcy court, thwarting the legislative intent of those states to learn the names of the abusers. In their efforts to protect their secrets they have even become unlikely bedfellows with a company that contributed to the US' current opioid crisis.

We do not think it is in the public interest for information about child predators, regardless of where they hunted, to remain hidden. It seems to us long past time for the federal government to reconsider this unintended consequence of the bankruptcy law.

CONTACT: Mike McDonnell, SNAP Interim Executive Director ([email protected], 267-261-0578), Melanie Sakoda, SNAP Survivor Support Director ([email protected]), Dan McNevin, SNAP Board of Directors Treasurer ([email protected], 415-341-6417), Shaun Dougherty, SNAP Board of Directors President ([email protected], 814- 341-8386)

(SNAP, the Survivors Network, has been providing support for victims of sexual abuse in institutional settings for 35 years. We have more than 25,000 survivors and supporters in our network. Our website is SNAPnetwork.org)