The Roman Catholic Diocese of Burlington has formally requested to exit the Chapter 11 bankruptcy proceedings it initiated two years ago, citing an impasse in negotiations with survivors of clergy sexual abuse. Bishop John McDermott announced that the diocese would no longer pursue the bankruptcy process after a committee representing claimants rejected a final settlement offer.

The diocese’s legal team presented what they described as a “best and final” proposal to pay just over $29 million to resolve outstanding claims. This figure translates to approximately $247,000 per claimant. The funds for this payout were intended to come from the sale of specific diocesan properties, including eldercare facilities and the campus of Rice Memorial High School.

Stalled Negotiations and Legal Costs

Bishop McDermott stated that the diocese had acted in good faith throughout the proceedings. “I believe the Diocese has made a good faith effort to resolve this process in a timely and just manner,” McDermott said. He added, “Unfortunately, our best offer was not accepted.”

The decision to abandon the bankruptcy case comes as legal expenses for the diocese have exceeded $2 million. The initial filing in 2024 was presented by church leadership as the most equitable method to address lawsuits while preserving the religious mission of the institution. However, with settlement talks stalled, Bishop McDermott concluded that continuing within the bankruptcy framework was no longer productive.

Dispute Over Parish Assets

A central point of contention in the case involves more than $400 million in assets transferred to local parishes over recent decades. Church officials have maintained that these transfers were legitimate and that the bankruptcy estate should be restricted to diocesan property, shielding individual parishes from litigation.

However, Bankruptcy Judge Heather Cooper ruled that the committee representing sex-abuse claimants could pursue its argument that parish resources constitute part of the diocesan estate. The court was approaching a final ruling on this matter when the diocese moved to exit the process.

Claimants’ Response

Daniel Stack, chair of the survivors’ committee and a claimant himself, characterized the request to dismiss the bankruptcy as a strategic retreat. He suggested the diocese is attempting to withdraw because the judge’s rulings undermined its legal strategy to protect parish assets.

Stack described the move as a “second attempt to avoid accountability.” His own lawsuit against the church had been paused by the 2024 bankruptcy filing. If the court approves the dismissal of the bankruptcy case, litigation could resume under state law that lifted the statute of limitations for sex-abuse claims.

Judge Cooper must now approve the diocese’s request to abandon the Chapter 11 process. The outcome will determine whether the cases return to civil court or remain within the federal bankruptcy system.