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February 21, 2020 Vol The Catholic WITNESSWITNESS The Newspaper of the Diocese of Harrisburg February 21, 2020 Vol. 55 No. 4 OCTOBER 9, Diocese2018 Files for Chapter 11 Protection VOL. 52 NO. 20 Restructuring Process will Lay a Foundation to Build Upon By Rachel Bryson, M.S. The Catholic Witness On Wednesday, February 19, Bishop Ronald Gainer walked to the podium and delivered an important update regarding the future of the Roman Catholic Diocese of Harrisburg. “Due to a culmination of events, primarily a steady decline in church attendance and the reality of dwindling Church revenues, and after much prayer and discernment, countless discussion with our accountants and attorneys, and in consultation with, and approval from, our Diocesan Finance Council and College of Consultors, our Diocese has had to come to terms with the harsh reality that we no longer have the funds to meet our current obliga- tions,” said Bishop Gainer. “That is why today, we must regrettably announce that the Roman Catholic Diocese of Harrisburg has filed for bankruptcy under Chapter 11 of the United CHRIS HEISEY, THE CATHOLIC WITNESS States Bankruptcy Code.” Bishop Ronald Gainer addresses a press conference at the Diocesan Bishop Gainer explained that this form of Center in Harrisburg on Feb. 19, announcing that the Diocese has filed bankruptcy is known as Reorganization Bank- for bankruptcy under Chapter 11 of the United States Bankruptcy Code. ruptcy and will allow the Diocese to continue its ministry work, while also equitably compen- clergy child sexual abuse, or 96% of those who foundation to build upon,” said Bishop Gainer. sating its creditors. participated in the Program, we already are in To help answer questions, the Diocese has “Over the past few years, our Diocese has receipt of half a dozen new lawsuits, any one launched a special page on our website, www. been forced to confront our horrific past re- of which could severely cripple the Diocese.” hbgdiocese.org, about our path to a more garding clergy sexual abuse. Today, we are “As Bishop, I must ensure the Diocese’s core vibrant and secure future as we look to lay A facing some difficult financial realities. Despite mission is upheld, which is to remain focused Foundation to Build Upon. making every attempt to scale back operations on Christ’s mandate to preach, teach, sanctify, “I humbly ask for your prayers for our Diocese and reduce overhead, we are currently unable and to serve those in need. We must work to as we move forward in this process. May God to meet our financial obligations,” said Bishop bring the Chapter 11 process to a conclusion, grant us every grace needed during this dif- Gainer. as soon as is reasonably possible and in a way ficult time. May Mary, Mother of the Church He went on to explain that for several years that allows us to be present to the commu- and our Mother, intercede with Her Son to be before receiving the Grand Jury Subpoena in nity, as we have been for the past 152 years,” our strength and support as well,” said Bishop 2016, the Diocese’s financial situation was in added Bishop Gainer. Gainer. a challenging condition. He stressed that this action does not include “Responding to that investigation forced us the parishes and schools of the Diocese as Frequently Asked Questions to incur very heavy legal costs, which has had they are considered separate legal entities. What is Chapter 11 Bankruptcy and how does it af- harsh financial consequences for the Diocese. “When I think about our current situation fect the Roman Catholic Diocese of Harrisburg? Those costs were not something the Diocese and the future, I cannot help but think about 1. What exactly is Chapter 11? Chapter 11 is a chapter un- was able to plan for in our budget, which what it will take to rebuild and strengthen our der the United States Bankruptcy Code pursuant to which a greatly limited the options available to us to Diocese as we move forward. You cannot build company or entity seeks to reorganize nancially under court anything without a strong and solid foundation. supervision, with the goals of being able to equitably and pro- correct the preexisting financial trend,” said portionally address the nancial claims of those to whom it Bishop Gainer. “Our current financial situa- As we read in Luke chapter six, verse 48, ‘He owes money and to emerge with its operations intact. A Chap- tion, coupled with changes in the law both is like a man building a house, who dug deeply ter 11 ling with the U.S. Bankruptcy Court immediately stops here and in New Jersey, where we are already and laid the foundation on the rock; when all efforts at collection of debts and legal actions against the named in one lawsuit and where we antici- the flood came, the rivers burst against that entity. A Chapter 11 ling does not mean the entity is going pate more to follow, left us with no other path house and could not shake it, because it had out of business. Under Chapter 11, an entity is able to main- been well built.’ Our Diocese currently lacks tain normal operations and continues to provide employees forward to ensure the future of our Diocese. with salaries and benets, and retiree benets. Despite the success of the Survivor Compensa- that strong foundation; however, at the end of tion Program, which helped 111 survivors of this difficult process, we will again have a solid More DIOCESE, page 2 2 - The Catholic WITNESS • February 21, 2020 DIOCESAN NEWS DIOCESE plate go to pay for this bankruptcy? The Continued From money you place in the collection plate will be used to fund your individual parish. 2. Why is the Diocese seeking reorganiza- 2. I am hesitant to give to a “bankrupt” or- tion under Chapter 11 now? Our Diocese’s ganization. Why should I? Your contributions nancial position has been tested as a result provide funding to operate crucial ministries of changes in the laws here and in New Jersey. for people from all walks of life. While the Dio- On December 1, 2019 New Jersey opened up course of action given the nancial liability our priests, deacons and seminarians. the Diocese faces. cese reorganizes, these needs continue and a two year “look-back” window. On June 11, 2. Will the Diocese be laying any employees One important aspect of ling for Chapter can only be met with the nancial support of 2019 the Pennsylvania Superior Court issued off as a result of restructuring and reorga- 11 protection is that ling stops all civil ac- the faithful. its “Rice Decision” which has effectively re- nization? While we cannot predict with one- tions, judgments, collection activities and re- animated certain time-barred claims. This hundred percent certainty that there will be 3. I made a large gift to the Diocese for lated actions by claimants. The stay, in effect, decision includes survivors of clergy-child no reductions in staff, that is not our inten- a specific cause. Is that money protected? provides time for the organization ling for sexual abuse, teacher/volunteer-child sexual tion. Yes. Restricted gifts and funds are protect- abuse, and/or other cases of abuse in the Chapter 11 protection to form a reorganiza- ed under law and cannot be used to settle Diocese. tion plan detailing how the available assets 3. Will the Diocese be able to pay employ- claims. These changes in law have resulted in the that it has will be used to pay claims and ne- ees as usual as it reorganizes? Yes, the Diocese being named in multiple claims of gotiate reasonable settlements. Diocese will continue to pay employees and 4. Will my gift to the Diocesan Annual Cam- retiree benets in the ordinary course of busi- paign (DAC) be used to pay legal settle- sexual abuse of a minor. 10. How long does reorganization take un- ness. ments? No. Gifts are made to the DAC to sup- Litigation costs and settlements will exceed der Chapter 11? There is no set schedule on many millions of dollars. The Diocese simply port specic ministries and programs and we how long it takes a debtor to reorganize under 4. Will retired priests and employees still intend to use the funds for those purposes. does not have the resources to equitably and Chapter 11. The Diocese’s hope is to bring receive their pensions and benefits? Yes, proportionally address these claims on a this to a conclusion within the next two years. the Diocese will continue to pay retiree ben- 5. Will the DAC operate in the same way one-by-one basis. ets. during reorganization? Yes. For many years, 11. What financial control will the Court the DAC has operated under a system in 3. What if the Diocese did not file for Chap- have over the Diocese in Chapter 11 bank- How will Chapter 11 Bankruptcy af- which goals are set for individual parishes us- ter 11? The Diocese would face multiple civil ruptcy? The Court will hear and decide on fect your parish school and afliated ing a formula based on parish demographics actions, a slow, unpredictable and costly pro- the Diocese’s requests to conduct business agencies? (number of households, Mass attendance, cess that would require years of court involve- as usual, e.g. carrying out its ministries, pay- 1. How will reorganization affect the daily parish collections, and median income of pa- ment. The rst survivor to obtain a judgment ing its employees, while the Diocese develops operation of your parishes, schools and af- rishioners) developed by HCAS.
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