Camden’s Catholic diocese left two-thirds of the claims filed with its sex abuse victim fund unpaid as it sought bankruptcy protection

More than two-thirds of the victims who signed up to participate in a fund set up by the Roman Catholic Diocese of Camden to compensate survivors of clergy sex abuse were left with their claims unresolved and diminished expectations of seeing a payout, according to previously unreleased information included in the diocese’s bankruptcy filings this week.

Now, 141 people who were encouraged by Bishop Dennis J. Sullivan to come forward and recount their trauma for fund administrators last year must join a line of other creditors — including banks, independent contractors, and lawsuit plaintiffs — to jostle in court over a limited pot of money that will be divided up by the bankruptcy court.

In announcing the move late Thursday to become the first diocese in New Jersey to seek Chapter 11 protection from creditors, church leaders said their intent was not to dodge their responsibility to abuse victims, but rather to ensure a future for the institution that serves South Jersey’s nearly half-million Catholics.

“The diocese does not seek bankruptcy relief to hide the truth or deny any person a day in court,” wrote the Rev. Robert E. Hughes, the diocese’s vicar general, in a declaration filed with the bankruptcy judge. But “beyond its obligation to creditors, the diocese has a fundamental and moral obligation to the Catholic faithful it serves [and] the greater community.… In order to do this, the diocese must survive.”

Victims and their lawyers decried the decision Friday, saying they believed they’d been victimized again — this time by a bait-and-switch.

“The diocese first betrayed survivors when church leadership protected their priests over the children these priests harmed,” said victim attorney Rita Gribko, “then canceled their compensation program. Now, this bald-faced, self-interested legal tactic is yet another betrayal.”

Outside Sullivan’s residence adjacent to the Cathedral of the Immaculate Conception on Camden’s Market Street, Robert Hoatson, 68, and Arthur Baselice, 72, stood Friday with signs featuring photos of victims, their abusers, and a slogan: “Church bankruptcy equals cover-up.”

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Hoatson, founder of the victims group Road to Recovery, said he was sexually abused by a priest in West Orange, N.J., in the 1960s. Baselice’s son, Arthur III, died of a drug overdose in 2006, which his father has blamed on two priests who molested him as a child.

Hoatson said, they’d been promised “every individual victim would have their opportunity to tell their story and then be compensated” if they participated in the victim compensation fund.

“Now, these individuals become part of a pool, and they’re not treated now as individuals,” he said. “Bankruptcy tends to lower the amounts that will be given."

Inside the cathedral, noon Mass proceded as normal. No one mentioned the bankruptcy filing during the service. The rector, the Rev. John Fisher, said afterward that the bankruptcy “is for the best for everybody.”

Signs of the diocese’s strained finances had been evident for months.

Sullivan prematurely suspended the Camden church’s participation in the victim compensation fund in July, citing a “precipitous decline in revenue” due to COVID-19 and a rash of sex abuse lawsuits enabled by recent changes to New Jersey’s civil statute of limitations. The fund had paid out a total of $8.1 million to 71 victims by the time it was shuttered.

The financial strain only continued to grow over the next several months, the bishop said, prompting the bankruptcy declaration.

The diocese’s court filings Thursday revealed for the first time the extent of those pressures.

For instance, in the nine months since New Jersey opened a temporary two-year window granting victims of decades-old abuse a second chance to sue, the diocese has been hit with 52 new lawsuits, according to the court documents. By comparison, it faced only 99 viable legal claims in all of the previous 30 years, the filings said.

Sullivan announced the Independent Victim Compensation Fund last year, hoping it would serve as a stopgap to fend off some of those suits by offering settlements determined by outside administrators and sparing victims from having to prove their abuse in drawn-out public court proceedings.

When the bishop halted that program this summer, church officials and fund administrators declined to say how many victims who had signed up for that offer were left hanging.

But according to Thursday’s bankruptcy filings, only one-third, or 71 of the participants, received a payout. Proposed settlements had been extended to 21 more and the claims of 120 were left unprocessed before the program ended, court papers said.

The bankruptcy pressed pause on all pending lawsuits and the claims of those who signed up for the fund while the court decides how to divide assets of the diocese available for distribution among all of the creditors.

In the coming months, the court, working with an oversight committee that will likely include at least some lawyers for abuse victims, will decide how much money will be made available for splitting up those who are owed and how much will stay protected by the bankruptcy process.

Church officials told the court in their filings Thursday that the diocese had more than 200 known creditors, including clergy sex abuse victims, and estimated liabilities of $25.7 million, including a $2.4 million loan it took out as part of the federal Paycheck Protection Program in April.

They listed $53.6 million in property assets, including the diocesan headquarters, as well as bank accounts, cars, and several items of jewelry.

As they are separate legal entities under state law, the bankruptcy is not expected to affect any of the 62 parishes and 29 schools the diocese oversees across Atlantic, Camden, Cape May, Cumberland, Gloucester and Salem Counties.

An earlier version of this story incorrectly reported the circumstances of Arthur Baselice III’s death. He died of a drug overdose in 2006.