Camden Latest Catholic Diocese Bankrupted by Clergy Abuse Claims

(Bloomberg) -- The Diocese of Camden in New Jersey filed for bankruptcy, becoming the latest U.S. Catholic Church district to seek court protection from a surge of lawsuits filed by victims of clergy sexual abuse.

The Camden diocese filed for protection late Thursday in New Jersey, joining at least five other dioceses that have declared bankruptcy this year to deal with sexual abuse claims. One of the largest church districts in the U.S., Long Island's Diocese of Rockville Centre, filed for Chapter 11 bankruptcy earlier this week.

“This decision is intended to allow for the fair compensation of the victims of abuse, the payment of debts to our creditors, and the safeguarding of the assets which make our religious, educational and social service ministries possible,” Bishop Dennis J. Sullivan wrote in a letter posted on the diocese website.

Sullivan also blamed the Covid-19 virus for straining diocese finances. The pandemic restricted church attendance while also increasing the needs of the elderly, homeless and poor people the district serves, according to a court filing.

The diocese borrowed $8 million to pay clergy abuse victims who filed claims with the New Jersey Independent Victims Compensation Program. The diocese has paid 71 clergy abuse victims an average of $114,000 since June 2019, according to a declaration it filed with the bankruptcy court. It ended its participation in the program this July.

Covid Combination

“If it were just the pandemic, or just the costs of the Victims Compensation Program, we could likely weather the financial impact; however, the combination of these factors has made that impracticable,” Sullivan wrote in the letter.

The diocese declared assets between $50 million and $100 million and liabilities between $10 million and $50 million. In court papers, the district said it was separate from its parishes and schools.

Read more: Catholic Church shields $2 billion in assets from abuse payouts

That distinction has been a source of conflict in other church bankruptcies, with some dioceses arguing they don't own parish and foundation funds while lawyers for abuse victims say that money should be part of the bankruptcy estate available for victim settlements.

The case is The Diocese of Camden, New Jersey, 20-21257, U.S. Bankruptcy Court for the District of New Jersey.

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