Vermont Priest Sexual Abuse Lawsuit and the Diocese Bankruptcy

Vermont priest sexual abuse lawsuits against the Roman Catholic Diocese of Burlington are on hold. The diocese filed for Chapter 11 bankruptcy on September 30, 2024, and that filing froze every pending case and blocked new ones. Survivors who want compensation must now file a claim inside the bankruptcy instead of suing in state court, and how much anyone eventually recovers depends on a still-unresolved fight over whether the diocese’s 63 parishes and roughly $500 million in parish trust assets can be reached.¹²

What the Bankruptcy Filing Did to Pending Lawsuits

The petition, filed in the U.S. Bankruptcy Court for the District of Vermont as Case No. 24-10205 before Judge Heather Cooper, triggered an automatic stay. That stay halts all pending and future litigation against the diocese while a reorganization plan is developed.³¹

At the time of filing, the diocese was facing at least 31 pending lawsuits, with new claims still being filed. It had already settled 67 cases before bankruptcy for roughly $34 million total.⁴⁵

Bishop John McDermott, installed as the diocese’s 11th bishop in July 2024, framed the filing as the only way to divide limited funds among all survivors instead of exhausting them on the earliest plaintiffs. In his affidavit, he stated the diocese had “very limited unrestricted diocesan funds, little diocesan property to sell, and likely no insurance coverage to help toward these settlements.”¹

How Survivors File a Claim

Even survivors who had already sued had to submit a separate confidential proof-of-claim form through the bankruptcy process to preserve their rights. The court set April 4, 2025, as the bar date, meaning the deadline by which abuse claims had to be filed. The California-based firm Stretto was contracted to receive and process those confidential forms.⁶

There are 119 outstanding abuse claims in the case, covering incidents dating back to 1950. If you missed the bar date, the file does not describe a mechanism for late claims; if you believe you have one, the file’s silence on late procedures means it is a question for a Vermont attorney rather than something to answer from general assumption.⁷

Why Old Abuse Claims Are Even Possible

Most of the substantiated abuse identified by the diocese occurred between 1950 and 2000, and for years the six-year statute of limitations blocked adult survivors from suing. Vermont removed that barrier in 2019 when Governor Phil Scott signed H.330, sponsored by Rep. Martin LaLonde. The law, codified as 12 V.S.A. § 522, eliminated the civil statute of limitations for childhood sexual abuse claims and applies retroactively.⁸⁹

One important condition: for claims that would have been time-barred before July 1, 2019, survivors can still sue the institution that employed or supervised the abuser, but damages in those revived cases require a finding of gross negligence rather than ordinary negligence.⁹

After the 2019 change, the diocese settled 20 additional cases for $4.5 million. Then-Bishop Christopher Coyne had warned the new law could produce a wave of lawsuits the church could not afford. That is essentially what happened, and the 2024 bankruptcy followed.⁴¹⁰

What the Diocese Says It Can Pay

The bankruptcy petition listed estimated assets of $10 million to $50 million and estimated liabilities of $1 million to $10 million, with between 100 and 199 creditors, most of them abuse survivors.³

The diocese reported total assets of roughly $30 million to $35 million, with about $10 million unrestricted. In fiscal year 2023 it spent more than $1 million on settlements and $691,000 on legal fees. Prior settlement waves had already forced the sale of the 32-acre Burlington headquarters for $10 million and the 26-acre Camp Holy Cross in Colchester for $4 million.¹¹⁰

Under bankruptcy supervision, one additional asset has been liquidated: Judge Cooper approved the December 2025 sale of the former Loretto Home, a 20,000-square-foot senior living facility on Meadow Street in Rutland, to Cornerstone Housing Partners for $1 million. The property had been listed for as much as $2.25 million. Proceeds are earmarked for bankruptcy administration and creditor payments.¹¹

The Fight Over $500 Million in Parish Assets

The dispute that will most affect what survivors recover is not about diocesan property at all. It is about the parishes.

In 2006, then-Bishop Salvatore Matano reorganized the diocese’s 63 parishes into individual charitable trusts, with the bishop as trustee and local pastors as administrators. Matano’s attorney was directed to implement the plan to shield parish assets from what the bishop described as the “unbridled, unjust and terribly unreasonable assault” of abuse litigation. Those trusts today hold an estimated $500 million.²

The diocese’s position is that the parishes are legally separate entities and their assets are not part of the bankruptcy estate. The Official Committee of Unsecured Creditors, representing survivors, argues that the diocese has operated since 1896 as a “corporation sole” and that the parishes were never truly independent, making their assets reachable.¹²

Plaintiff attorney Jerome O’Neill had previously challenged the 2006 transfers under Vermont’s fraudulent deeds law, filing state and federal cases in 2009 before dropping them and allowing the six-year period for contesting the transfers to lapse. He has argued a judge could still rule the trusts are diocesan assets if a jury verdict cannot be satisfied from diocesan funds, saying the bishop’s dual role as trustee makes the structures “more vulnerable to attack.”²

At a March 2025 hearing, Judge Cooper indicated she was inclined to order disclosure about the parish assets, but ruled the creditors committee would need to subpoena individual church organizations directly. The committee has requested property records for parishes, schools, residential care homes, and charitable organizations, along with insurance policies and clergy personnel files back to 1945.¹²

Where the Case Stands

The diocese was originally required to file a reorganization plan by January 28, 2025. That deadline has been pushed repeatedly. Months of mediation between the diocese and the creditors committee produced no agreement, with the parish trust question remaining the impasse. Committee attorney Brittany Michael told the court, “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.”⁷

Legal fees had reached $2.1 million by May 2026. Of that, $842,262 went to the diocese’s counsel. The rest was split among the creditors committee’s professionals: $807,041 to Pachulski Stang Ziehl and Jones, $470,603 to the Berkeley Research Group, and $26,386 to Lemery Greisler.¹³

Judge Cooper has been openly frustrated. “It’s beyond time for some forward movement,” she said in open court, adding, “My concern is that I don’t want it all going to the professionals. I do think that the survivors probably would like to have something left over at the end of the day.” In late May 2026, she held a closed-door meeting with all counsel to discuss preserving assets and breaking the deadlock. To fund its own operations during the case, the diocese has cut staff to a 30-hour workweek and relied on an annual appeal and a tax on parish income.¹³⁷

No timeline has been set for a reorganization plan. Whether survivors are paid out of the diocese’s roughly $10 million in unrestricted funds alone, or out of a much larger pool that includes parish trust assets, remains the question the court has not yet answered.⁷

1
National Catholic Reporter. Diocese of Burlington VT Files Bankruptcy to Settle Sex Abuse Claims
2
VTDigger. How Vermont’s Catholic Church Stashed Away a Half Billion Dollars in Assets
3
Bishop Accountability. Roman Catholic Diocese of Burlington Files for Bankruptcy Protection
4
CHILD USA. Vermont Stalling the Catholic Abuse Through Bankruptcy
5
Valley News. Vermont’s Roman Catholic Diocese Facing More Abuse Claims Files for Bankruptcy
6
U.S. Bankruptcy Court, District of Vermont. Roman Catholic Diocese of Burlington Sexual Abuse Proof of Claim
7
Valley News. Diocese Chapter 11 Abuse Claims
8
VTDigger. Scott Signs Bills Removing Statute of Limitations for Child Sexual Abuse Claims
9
Vermont General Assembly. 12 V.S.A. § 522
10
Vermont Catholic. Reorganization
11
VTDigger. Vermont Catholic Church Receives Bankruptcy Court’s OK to Sell Rutland Property
12
News From the States. Abuse Claimants in Vermont Catholic Bankruptcy Case Seek Details About Local Assets
13
VTDigger. Judge Concerned as Vermont Catholic Diocese’s Bankruptcy Case Hits $2M in Legal Bills