Vermont Catholic Diocese in Bankruptcy Over Abuse Claims, With $500 Million Parish Trust Dispute Unresolved

The Roman Catholic Diocese of Burlington, Vermont’s sole Catholic diocese, filed for Chapter 11 bankruptcy on September 30, 2024, after facing a growing number of clergy sexual abuse lawsuits that it said it could no longer settle one at a time. The filing consolidated more than 100 abuse claims into a single federal proceeding and halted pending and future litigation against the church while a reorganization plan is developed. As of mid-2026, the source reports, the case remains unresolved. Legal fees have exceeded $2 million, no reorganization plan has been submitted, and the central dispute concerns whether several hundred million dollars in parish assets can be used to compensate survivors.

The abuse at the center of the litigation spans roughly fifty years. Most of the substantiated allegations involve conduct by diocesan priests between 1950 and 2000. In August 2019, Bishop Christopher Coyne released a report identifying 40 priests who had been credibly accused of sexually abusing minors during that period. An independent committee of seven lay volunteers, including a retired state’s attorney and a veteran journalist, compiled the report, reviewing 52 cases and substantiating 40. Thirteen of the accused priests were still living at the time, though none remained in ministry. All but one allegation predated 2000. Bishop Coyne described the history as a “family secret” that had been allowed to “fester like neglected wounds” and gave the report to the Vermont Attorney General’s office. The Survivors Network of Those Abused by Priests called the disclosure “a belated step towards transparency” but criticized the diocese for omitting details about how church officials initially handled the allegations.

The diocese had turned over priest files containing abuse allegations to the state attorney general as early as 2002. That investigation, led by then-Attorney General William Sorrell, found probable cause to charge at least one priest, Father Brian Mead, with multiple counts of lewd and lascivious acts with a child. No charges were filed against Mead or anyone else, because prosecutors said the statute of limitations had expired.

A separate matter involved St. Joseph’s Orphanage in Burlington, a Catholic-run facility that operated from 1854 to 1974. Following investigative reporting by BuzzFeed News and the release of a Pennsylvania grand jury report on widespread Catholic clergy abuse, Vermont Attorney General T.J. Donovan convened a task force in September 2018 to examine abuse allegations at the orphanage. The investigation involved state police, the Chittenden County State’s Attorney, and the Burlington Police Department. The task force’s report, released in December 2020 and running nearly 300 pages, confirmed that physical, mental, and sexual abuse had occurred at the orphanage over several decades. No criminal charges were filed, because the statutes of limitation had long expired and investigators found no credible evidence to support allegations of homicide, the one crime with no time limit. The Sisters of Providence, the order of nuns that ran the facility, did not cooperate with the investigation. Attorney General Donovan said that “the limits of the law mean that justice for the survivors will not be found in a criminal courtroom.” The state instead launched a restorative justice process to document former residents’ experiences.

For years, the statute of limitations was the main barrier to Vermont abuse survivors suing the church. That changed in 2019, when Governor Phil Scott signed H.330 into law. Sponsored by Rep. Martin LaLonde, the bill eliminated the six-year statute of limitations for civil claims involving childhood sexual abuse. The law, codified as 12 V.S.A. § 522, applies retroactively. For claims that would have been time-barred before July 1, 2019, survivors can still sue the institution that employed or supervised the abuser, though damages in those cases require a finding of gross negligence. Bishop Coyne had warned at the time that the new law could trigger a fresh wave of lawsuits the church could not afford. The diocese settled 20 additional cases after 2019, and by late 2024 it faced at least 31 more pending lawsuits, with new claims still being filed.

Before filing for bankruptcy, the diocese spent roughly $34 million settling 67 abuse lawsuits over nearly two decades. The largest wave came in 2010, when nearly 30 cases were resolved for about $20 million. To fund those payments, the diocese sold its 32-acre Burlington headquarters for $10 million and the 26-acre Camp Holy Cross in Colchester for $4 million. Further settlements followed: $6.75 million for 12 cases in 2013, and $4.5 million for 20 cases after the 2019 change in the law. By 2024, the diocese reported total assets of roughly $30 million to $35 million, with about $10 million classified as unrestricted funds. In fiscal year 2023 alone, it spent more than $1 million on settlements and $691,000 on legal fees. Bishop John McDermott, installed as the diocese’s 11th bishop in July 2024, stated in his bankruptcy affidavit that the diocese had “very limited unrestricted diocesan funds, little diocesan property to sell, and likely no insurance coverage to help toward these settlements.”

Bishop McDermott announced the filing through a video message and letter, apologizing for the pain caused by abusive clergy. “While my heart is heavy with the decision to pursue Chapter 11 reorganization, such weight pales in comparison to the pain suffered by victims of abuse,” he said. He described the bankruptcy as the way to distribute available funds fairly among all survivors, rather than depleting resources through individual settlements with a smaller group of plaintiffs. The petition, Case No. 24-10205, was filed in the U.S. Bankruptcy Court for the District of Vermont before Judge Heather Cooper. It listed estimated assets of $10 million to $50 million, estimated liabilities of $1 million to $10 million, and between 100 and 199 creditors, the majority of whom are sexual abuse survivors. The filing triggered an automatic stay, and even survivors who had already sued were required to submit a separate confidential claim form. The court set April 4, 2025, as the deadline for abuse survivors to file claims, and the California-based firm Stretto was contracted to receive and process the forms.

The most contested question in the bankruptcy concerns money that sits outside the diocese’s balance sheet. In 2006, then-Bishop Salvatore Matano directed that the diocese’s 63 parishes be reorganized into individual charitable trusts, with the bishop as trustee and local pastors as administrators, designated to hold property and funds for “pious, charitable or educational purposes.” The bishop said the plan was meant to protect parish assets from what he called the “unbridled, unjust and terribly unreasonable assault” of abuse litigation. The trusts now hold an estimated $500 million in collective assets. The diocese maintains that the parishes are legally separate entities not included in the bankruptcy estate. The Official Committee of Unsecured Creditors, which represents abuse survivors, disagrees, arguing that the diocese has operated since 1896 as a “corporation sole” and that the parishes were never truly incorporated as independent entities, making their assets reachable. Plaintiff attorney Jerome O’Neill had challenged the 2006 trust transfers under Vermont’s fraudulent deeds law in state and federal cases filed in 2009, but he later dropped the fight, allowing the six-year limitations period to lapse. He has argued that a judge could still rule the trusts are diocesan assets if a future jury verdict cannot be satisfied from the diocese’s own funds, noting that the bishop’s dual role as trustee makes the structures “more vulnerable to attack.” Here the accountability question is what the diocese owes those harmed, a matter of the kind Luke 12:48 addresses.

At a March 2025 hearing, Judge Cooper indicated she was inclined to order the diocese to disclose information about these assets. She ruled, however, that the creditors committee would need to subpoena individual church organizations directly to obtain their specific financial records. The committee has requested a broad range of documents, including property records for all parishes, schools, residential care homes, and charitable organizations, as well as insurance policies and clergy personnel files dating back to 1945.

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