Bankruptcy Shortens the Time for New Orleans Clergy Abuse Survivors to File Legal Claims

by Frank E. Lamothe, III

After paying millions of dollars in compensation to victims of child sexual abuse, the Archdiocese of New Orleans is the latest division of the Catholic Church to file for Chapter 11 bankruptcy protection. What does this mean for survivors of childhood sexual abuse at orphanages, youth homes, churches, schools, and other organizations run by the church in southern Louisiana?


What Does Chapter 11 Bankruptcy Mean?

In a Chapter 11 bankruptcy proceeding, an organization asks the court to evaluate all of its debts and assets. The court’s appointed representative values all the debtor’s property, cash, holdings, and other items of value and enumerates all of its outstanding bills, debts, costs, and other liabilities.

The court requires that everyone with an unpaid bill, lien, or other claim or potential claim against the debtor come forward and put that claim on the record by a specific date. The creditors then negotiate with the debtors to come up with a Plan of Reorganization, which will determine exactly how much each creditor will be paid for their claim- including claimants who made sexual or physical abuse claims.

The Effect of the Archdiocese’s Bankruptcy on Survivor’s Child Abuse Claims That Have Not Yet Been Filed

Individuals who suffered physical or sexual abuse as children by a member of the clergy, nun, or employee of the Catholic Church may have legal claims against the Archdiocese of New Orleans. But because of the bankruptcy, such survivors of clergy abuse may have a much shorter window of time to initiate claims. Currently, they still have time to assert their rights in the bankruptcy proceedings. Even if they have met with a lawyer before and been told that it is too late to file a lawsuit, they may be able to assert their rights in the bankruptcy proceeding. However, if they do not file a claim by the deadline the court sets, they risk forever losing their right to payment.

The Effect of the Archdiocese’s Bankruptcy on Survivor’s Child Abuse Claims That Have Already Been Filed in Court and Claims Filed Directly with the Archdiocese

Because of the bankruptcy filing, all the lawsuits currently in process in Louisiana’s state courts will be consolidated into the bankruptcy case. All claims that have been filed directly with the Archdiocese will be consolidated into the bankruptcy case. The bankruptcy court will enter an order setting specific dates for the case proceedings, including a deadline for parties to register potential claims with the court.

Don’t Give Up Your Rights—Contact a New Orleans Clergy Abuse Lawyer Now

If you believe you may have a claim for child abuse against the Catholic Church, contact an experienced attorney immediately for a free consultation. The Lamothe Law firm has represented many survivors in lawsuits against the Archdiocese of New Orleans and negotiated many significant settlements.

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