In In re Roman Catholic Diocese of Burlington Vermont, (Bkrptcy VT, July 28, 2026), a Vermont federal bankruptcy court issued an order allowing the Creditors Committee representing more than 100 sex abuse claimants to sue to attempt to recover assets of 70 Vermont parishes, Parish Trusts, schools and other Catholic-related social and community service organizations. The Committee claims that these organizations are not separate legal entities from the Diocese and that their assets should be available to satisfy creditors' judgments against the Diocese. The litigation authorized by the court will determine whether this claim is valid. The court warned however:
Regardless of its outcome, the proposed litigation will be expensive and time consuming. Unless settled, 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.
More clarity about the rights of the parties and what constitutes estate property could help the ongoing efforts to reach a global settlement in this case. For that reason, some litigation is necessary. Its cost may eventually outweigh the benefit if no settlement is reached and as one Court has recognized, “Debtor, the parishes and the abuse victims will be the poorer for it.”
AP reports on the court's decision. [Thanks to Thomas Rutledge for the lead.]
