Employee pay, millions of dollars in assets discussed at first Harrisburg Diocese bankruptcy hearing

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HARRISBURG, Pa. (WHTM) — Up for debate in federal court Friday were the assets of the Roman Catholic Diocese of Harrisburg. It was the first of multiple hearings in the Chapter 11 proceedings.

This comes less than 48 hours after the diocese filed for bankruptcy, and months after it paid more than $12 million to survivors of clergy sex abuse.

No church leaders were at the hearing the Ronald Reagan Federal Building and Courthouse.

For now, the diocese’s 177 employees will continue to be paid, as operations go on as normal.

The diocese says it has 200 creditors and estimated liabilities between $50 million and $100 million, with assets of less than $10 million.

But, the way money is handled within the diocese and its affiliated institutions is complicated.

Church officials say entities, schools and charitable organizations, and the nearly $150 million among them, should be kept out of these proceedings, as the money is necessary to keep those activities afloat and is often controlled by the independent organizations.

Creditors are questioning that and what should be considered assets.

To protect the creditors, the judge put some limits in place, saying the church can’t shuffle significant amounts of money.

Lawyers for the diocese are working to figure out who exactly is in charge of which accounts and trusts, and how each of these will be impacted as the diocese restructures.

Both sides agreed the identity of creditors, which include sexual assault survivors and employees, will be protected.

The diocese’s lawyers said they were not available for interviews after the hearing.

A church representative sent ABC27 a statement, saying in part, “any and all issues related to our assets will be resolved through the bankruptcy process.”

“For decades upon decades the Catholic Church has been acting in a criminal matter and now the day of reckoning for the Catholic Church and the Diocese of Harrisburg,” said Attorney Mitchell Garabedian.

Garabedian, who as portrayed in the movie “Spotlight,” was key to exposing the Boston clergy sexual abuse epidemic, represents victims across the country, including in Harrisburg.

He says the bankruptcy filing can actually be helpful to survivors, because the diocese is forced to review assets and make them public.

Garabedian says he has represented five male clergy sexual abuse victims in the compensation program associated with the Diocese of Harrisburg. 

“These five brave victims, who are now approximately 50 to 62 years old, were sexually abused when they were approximately 8 to 17 years old from approximately 1969 to 1984. The average settlement among the five victims was about $120,000,” said Garabedian.

The attorney added that he represents one individual who was abused by a church employee but was not allowed to enter the compensation program, because the program did not cover sexual abuse by church employees. He says if and when the statute of limitations is amended, he will file a civil complaint for the victim.

More than 20 other Catholic dioceses in the U.S. have filed for bankruptcy.

“The filings are directly related to the statute of limitations being amended from state to state to state, which is allowing victims to proceed in the courts and therefore be giving the potential to be given large financial rewards against the diocese,” said Garabedian.

The judge scheduled another hearing for April 2.

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