A federal bankruptcy judge in Burlington has issued an order allowing claimants alleging clergy abuse to file lawsuits challenging the Vermont Roman Catholic Diocese’s shield of parish assets in its ongoing financial reorganization proceeding. Judge Heather Cooper’s ruling permits abuse creditors to pursue claims against both the diocese’s central holdings and the trust-protected property and possessions of approximately 70 parishes across the state, ranging from small communities to populated areas.
The decision does not guarantee claimants access to any parish assets but rather authorizes them to proceed with legal action to determine their entitlement to local holdings. Cooper noted in her July 28 ruling that without settlement, “there may be years of litigation ahead and millions of dollars spent in attorneys’ fees and costs that could have been paid valid abuse claims.” The diocese and its legal representatives declined to comment publicly but had filed a substantial objection to the pursuit of parish assets just days before the ruling. Diocese officials now face two paths forward: engaging in closed-door mediation sessions scheduled for the week following the order, or continuing litigation that has already generated $2 million in legal expenses over two years.
Attorneys representing a court-appointed committee speaking for more than 100 abuse claimants filed the lawsuit seeking a declaration that all church assets should be available for creditor compensation. The diocese filed for Chapter 11 bankruptcy protection in fall of 2024, stating that historical priest misconduct settlements had reduced its primary financial reserves to approximately $35 million. Claimants counter that the collective holdings of 66 parishes, valued at up to $500 million, should be accessible despite the diocese’s 2006 decision to place local properties into trusts for protection.
The diocese has pursued asset sales to generate settlement funds, having sold its South Burlington headquarters for $3.13 million and a former senior living facility in Rutland for $1 million, with pending approval to transfer a high school campus valued at $4.3 million to a nonprofit group. Records indicate the diocese has distributed $34.5 million to settle 67 clergy misconduct claims over the past two decades while facing 119 additional pending claims originating from as far back as 1950. The Vermont diocese is one of 44 Catholic entities nationally to pursue Chapter 11 protection.
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