The Archdiocese of New Orleans is getting set to file for bankruptcy, reports The Times-Picayune/New Orleans Advocate, a media partner of CBS New Orleans affiliate WWL-TV.
The newspaper says the filing could come as soon as Friday.
Mounting costs from unresolved clergy-abuse lawsuits and the shutdown of church services due to the COVID-19 pandemic led to the Archdiocese’s financial problems, according to the report.
The archdiocese is expected to continue operating in a relatively normal manner. It intends to run masses and schools under “the new normal.”
WWL legal analyst Chick Foret said the move gives the archdiocese a break.
“This is the initial filing in a very complicated procedure, but what it does short term is, it hits the pause button,” Foret said. “It stops the people, creditors, from collecting any debts that the archdiocese would owe at this point. They don’t have the money to pay now anyway, the archdiocese says, because their cash flow has been stopped and interrupted by the coronavirus.”
Any pending litigation against the Archdiocese by any alleged victims of sexual abuse will be stayed for the time being. A bankruptcy judge will decide whether those cases can move forward.
The Times-Picayune/New Orleans pointed out that, “Archbishop Gregory Aymond and other church leaders may eventually be forced into some of the same kinds of bitter choices that followed Hurricane Katrina, when a reorganization plan closed dozens of churches and merged parishes across the metro New Orleans area.”