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Camden’s Roman Catholic diocese declares bankruptcy, citing COVID-19 costs and priest abuse claims

The Diocese of Camden said Thursday that it will file for bankruptcy protection, citing a loss of revenue due to COVID-19 and because of more than $8 million it’s paid out to victims of clergy abuse.

Pedestrians early Friday along Market St. outside the Diocese of Camden at 631 Market St. in Camden, NJ on Friday morning October 2, 2020. Reports that the diocese is filing for Chapter 11 bankruptcy.
Pedestrians early Friday along Market St. outside the Diocese of Camden at 631 Market St. in Camden, NJ on Friday morning October 2, 2020. Reports that the diocese is filing for Chapter 11 bankruptcy.Read moreALEJANDRO A. ALVAREZ / Staff Photographer

The Roman Catholic Diocese of Camden filed for bankruptcy Thursday, becoming the first in the state to seek protection from financial claims since Gov. Phil Murphy signed a bill into law last year allowing victims of decades-old sexual abuse to new opportunities to sue.

Bishop Dennis J. Sullivan cited the more than $8 million the church has paid out so far to victims in settlements and judgments as well as a loss of revenue since the onset of the coronavirus pandemic in a letter explaining the decision to South Jersey’s Catholic faithful.

“If it were just the pandemic, or just the costs of the Victims Compensation Program, we could likely weather the financial impact," he wrote. “However, the combination of these factors has made that impracticable.”

With its filing, the Camden diocese joins more than 20 dozen others across the United States that have sought similar protection since the clergy sex-abuse scandal first exploded in Boston 18 years ago, including Harrisburg’s, which filed for bankruptcy protections in February.

Camden’s filing came hours after the Diocese of Rockville Centre, on Long Island, N.Y., became the largest in the United States to seek to seek similar court assistance from its debts to date.

All have cited similar economic stresses. But the signs of financial trouble had been brewing in Camden for months.

Sullivan announced in July that the diocese would suspend all payments from a victim compensation fund set up to offer payouts in out-of-court settlements, citing a “precipitous revenue decline.” The fund had paid out $7.6 million, but some victim claims were left pending and a spokesperson said at the time that he did not know how many would go unresolved.

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Church leaders had hoped to fend off a flood of lawsuits enabled by the 2019 state law that opened a temporary, two-year window to file suit based on claims that were previously time-barred. Despite that, the diocese still faces more than 50 suits from accusers whose claims remain pending in court.

In his letter Thursday, the bishop said he approved the decision to declare bankruptcy hoping that it would allow the church to continue serving area’s Catholics while also ensuring that abuse survivors could continue to receive some compensation.

But attorneys for sexual abuse victims said by seeking to limit its exposure to civil suits by shielding its assets in bankruptcy court, church leaders were dodging the moral debt they owed victims.

“The diocese is running from accountability,” said attorney Greg Gianforcaro, whose firm has filed more than a dozen suits against clergy in the diocese. “Instead of standing up for the people entrusted to their care and acknowledging the harm done to children for which they are responsible, the diocese is taking drastic, self-serving measures to ensure the truth is suppressed.”

The Camden diocese oversees nearly half a million Catholics in 62 parishes in Atlantic, Camden, Cape May, Cumberland, Gloucester and Salem Counties.

It told the court in its filings Thursday that it has more than 200 creditors and estimated liabilities of $25.7 million. The largest of those was $25 million owed to PNC bank. The diocese also cited 17 unresolved claims — the majority of which involve allegations of sexual abuse by priests — for which it could still be ordered to pay big-figure judgments.

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Its listed property assets worth $53.6 million, including the diocesan headquarters at 631 Market Street in Camden, as well as cars and several items of jewelry like an bejewled golden cross from Pope Pius X.

The bankruptcy is not expected to affect diocesan schools, parishes, or pension plans, Sullivan said. Parishes are separate legal entities under state law and not included in the bankruptcy filing.

“We will be working with the court to ensure that our ministries are protected and that we continue to provide the needed services to so many in our diocese and the greater community we serve,” the bishop said.