El Paso Catholic Diocese files for bankruptcy, citing costs of sexual abuse lawsuits

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The Catholic bishop of El Paso, Texas, Mark Seitz (C), participates in a binational mass attended by hundreds of Mexican and US Catholics across the border, held in memory of migrants killed by crossing the Rio Bravo in their attempt to reach the Uni

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EL PASO, Texas - The Catholic Diocese of El Paso on Friday filed for bankruptcy reorganization, claiming the move is "the only path to a just and equitable resolution."

Courts filings state the Diocese is currently named as a defendant in 12 sexual abuse lawsuits in New Mexico from the time that they oversaw that area prior to the creation of the Diocese of Las Cruces in 1982. The lawsuits allege sexual abuse by priests at a number of New Mexico parishes between 1956 and early 1982.

What they're saying:

"I determined Chapter 11 reorganization was the most prudent course of action because there are now financial claims pending against the diocese that exceed our means," El Paso Bishop Mark Seitz said in a release Friday. "In taking this action, we have two goals: to equitably compensate those who have been harmed, and to carry on the essential ministries of the Church in our diocese so we can continue to meet the needs of all who rely upon the Church."

The church said it has been operating at a loss for many years. Court filings show the diocese reported $14.96 million in revenue for the last fiscal year, compared to $15.36 million in expenses.

"The Diocese's already precarious financial position is now severely exacerbated by litigation and claims related to decades-old clergy sexual abuse," El Paso Diocese Chief Financial Officer Gregory Watters said in court filings. "These cases represent our most significant financial threat and the primary driver for our decision to seek Chapter 11 protection."

Watters said, based on prior judgments in similar cases, that the settlements of those already filed and any potential new cases could result in a "total financial collapse" of the church.

Seitz called the area served by the diocese as "vast, rural and poor" in court filings. The Diocese covers a 10-county area in West Texas with around 686,000 Catholics. The diocese operates as a home mission diocese, meaning it cannot sustain itself without outside assistance.

"As a result, the Diocese receives limited assistance in the form of grants for certain eligible activities, which amounts have ranged from $2.5 million to $4.5 million annually, but this support is insufficient to address our structural deficit or the unprecedented legal costs we face now," Seitz said.

Bankruptcy filing ‘compounds the trauma,' attorney for victims says

Wouter Zwart, one of the attorneys representing the victims in the lawsuit, said the bankruptcy filing "compounds the trauma" for survivors and delays justice in the cases.

The other side:

"The survivors we represent were children when they were abused by priests. Some were abused by the same priest for years and years. They have waited decades for accountability, recognition, and justice," Zwart said. "They have come forward at great personal cost, sharing deeply painful experiences in the hope that the truth would come to light. For them, this process is about being heard, believed, and ensuring that the Catholic Church is held responsible."

One of those alleging abuse by the church, Isaac Melendrez, Jr., said the bankruptcy removes the possibility of justice for the victims.

"Today, just like in the past, the Diocese is only doing what is best for them. By filing for bankruptcy, they have removed the opportunity for us to hold them accountable for their failures in a court of law," Melendraz said. "Bankruptcy brings no Justice to the victims, only blanket protection to the Diocese."

Credible accusations of abuse in the El Paso Diocese

In 2019, Seitz released a list of clergy with credible accusations of sexual abuse against minors as determined by the church.

The list of 30 names comes from priests that served in the diocese either as a member of the diocese or as a guest priest from 1950 forward.

Seitz said in the 2019 release that the names represented between 2–3% of the total number of priests that have served the El Paso Diocese during that time. According to the report, the church has not received a credible claim of abuse since 1998.

"The Diocese does not seek Chapter 11 relief to avoid its responsibilities to claimants," Seitz said.

"Some of you may feel disheartened or frustrated by this development.  Some may feel anger or resentment at the allegations that some who were called to serve children and the vulnerable abused them instead," Seitz said in his video message Friday. "Believe me when I say I have experienced the same emotions."

What is Chapter 11 bankruptcy?

A Chapter 11 bankruptcy allows a business to reorganize its debts and operations under court supervision while continuing to operate.

This differs from a Chapter 7 bankruptcy, which requires the business to liquidate its assets to pay off its debts.

Seitz said the filing does not include individual parishes, schools or other incorporated entities like the Catholic Foundation of the Diocese of El Paso.

According to The Catholic Project, and Penn State Law Professor Marie T. Reilly, 18 diocese are currently going through bankruptcy proceedings, including El Paso. Twenty-two others have filed and emerged from bankruptcy. The Diocese of El Paso is the first diocese in Texas to file for bankruptcy.