A court-appointed committee representing more than 100 clergy abuse survivors has asked a federal bankruptcy court in Burlington, Vermont, to grant access to an estimated $500 million in parish assets that the Diocese of Burlington placed into individual trusts two decades ago, arguing the transfers were structured to keep those funds beyond the reach of abuse claimants.

The Trust Arrangement at Issue

The Diocese of Burlington filed for Chapter 11 bankruptcy protection in the fall of 2024, becoming one of 44 Catholic entities in the United States to seek that protection in recent years. The diocese’s highest-level holdings now stand at roughly $35 million — a fraction of what the committee contends was deliberately moved out of reach.

At the center of the dispute is a decision made in 2006 by then-Bishop Salvatore Matano to place nearly 70 local parishes into separate individual trusts. Church lawyers attached form letters to property deeds restricting use of those holdings to “pious, charitable or educational purposes.” Matano also wrote a letter to Vermont Catholics that year explaining the asset protection measures. The collective value of the parish assets placed in those trusts is now estimated at approximately $500 million.

The federally appointed claimants’ committee filed a 67-page petition in U.S. Bankruptcy Court in Burlington laying out the argument that the 2006 transfers amounted to a deliberate strategy to insulate funds from survivor claims. Brittany Michael, the attorney representing the committee, said “the diocese transferred approximately hundreds of millions in assets to fund the parish trusts, and did so expressly for the purposes of shielding those assets from survivor claims.”

Michael added that the structure was unprecedented in her experience: “I’ve never had a diocese that had set up separate trusts for each individual parish in order to attempt to shelter those funds from survivors.”

Scale of the Claims

The Burlington diocese has already paid $34.5 million to resolve 67 clergy misconduct lawsuits over the past two decades. It now faces 119 additional claims, some dating as far back as 1950. The claimants’ committee argues that with only $35 million in unrestricted diocesan holdings, survivors cannot be meaningfully compensated unless the court looks past the trust structure to the parish assets beneath it.

A Widening National Pattern

Vermont’s situation reflects a broader reckoning across the American Church. Dozens of dioceses have sought bankruptcy protection as the volume of clergy abuse litigation has grown and statutes of limitations have been reformed or suspended in many states. The legal question of whether parish assets are protected from diocesan creditors — or whether those assets can be reached when a diocese is insolvent — remains unsettled and is being litigated in multiple jurisdictions.

The outcome of the Burlington case could carry significant implications for how future diocesan bankruptcies are structured and whether asset-protection trusts established before a bankruptcy filing can withstand judicial scrutiny.

The Church’s own social teaching, particularly its long tradition on restorative justice and the duty of institutions to repair harm done by those acting in their name, adds a moral dimension to questions that courts will ultimately decide on legal grounds. How the Diocese of Burlington and its creditors proceed will be watched closely by survivors, Church officials, and bankruptcy practitioners across the country.

Category: Church