A U.S. Bankruptcy Court judge in Vermont issued an order permitting clergy abuse claimants to file a lawsuit seeking access to approximately half a billion dollars in parish assets held by the state’s Roman Catholic Diocese. Judge Heather Cooper’s written decision, issued on July 28, allows creditors to pursue both the diocese’s highest-level financial holdings and the property and possessions of nearly 70 parishes throughout Vermont, ranging from locations with populations under 700 to larger communities.
The ruling does not guarantee that parish assets will be awarded to abuse claimants but rather permits them to initiate legal proceedings to determine their eligibility to access local holdings. Cooper noted in her decision that without resolution, the case could result in years of litigation and millions in attorney fees that might otherwise fund abuse settlements. Diocese leadership and legal representatives declined to comment but had filed an objection to the asset pursuit as recently as July 21. They now face the option of negotiating with abuse claimants in mediation sessions scheduled for the current week or continuing litigation, having already incurred $2 million in legal costs over the previous two years.
The diocese filed for Chapter 11 bankruptcy protection in the fall of 2024, stating that past priest misconduct settlements had reduced its primary financial holdings to approximately $35 million. Attorneys representing a federally appointed committee of over 100 clergy abuse claimants submitted a lawsuit arguing that all church assets should be available to creditors. The diocese had previously attempted to shield parish properties by placing them in trusts in 2006. The diocese has already taken steps to raise funds through asset sales, including the sale of its South Burlington headquarters for $3.13 million and a former senior living facility for $1 million, and is seeking court approval to transfer a high school campus valued at $4.3 million to a new nonprofit entity.
According to records, the diocese has paid $34.5 million to settle 67 clergy misconduct lawsuits over the past two decades while still facing 119 additional claims with some allegations dating back to 1950. The diocese is among 44 U.S. Catholic entities that have sought Chapter 11 protection. Federal law requires both court and creditor approval of any reorganization plan.
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