Harrisburg diocese bankruptcy could tap into parish assets

At left, the Rev. Matthew Larlick of St. Joseph’s in Berwick, Columbia County, speaks with another priest outside the Harrisburg diocese office after a meeting Wed., Feb. 19, 2020. (Brett Sholtis/WITF)

At left, the Rev. Matthew Larlick of St. Joseph’s in Berwick, Columbia County, speaks with another priest outside the Harrisburg diocese office after a meeting Wed., Feb. 19, 2020. (Brett Sholtis/WITF)

The Rev. Walter Guzman was one of dozens of priests summoned to the Harrisburg Diocese office Wednesday afternoon, where he learned that the diocese was filing Chapter 11 bankruptcy.

“I didn’t know, to be honest, what to expect,” said Guzman, the pastor at St. Mark the Evangelist Roman Catholic Church in Greencastle, Franklin County. “We just found out today.”

Now, he and other priests from 89 parishes in 15 counties will have to see what the bankruptcy means for those churches — and for the churchgoers who put money into collection baskets during Mass.

The bankruptcy stems from mounting legal bills related to a grand jury investigation into clergy sex abuse. The diocese has said money that parishioners donate isn’t used to pay sex abuse settlements.

However, parish assets, including real estate, trusts and funds, built up over generations of community support, may come into play as the diocese faces as much as $100 million in claims.

Since 2009, parishes have existed as separate corporate entities from the diocese. They make up a significant amount of what the diocese is worth.

In its bankruptcy filing, the diocese estimates that, without the parish assets, it is worth between $1 million and $10 million.

However, the most recent audit shows the Harrisburg diocese claimed $181 million in total assets in 2018, including properties valued at $20.4 million.

Parish assets are not included in the chapter 11 bankruptcy, said Matt Haverstick, an attorney for the diocese.

However, Haverstick said he expects that during the bankruptcy process, the parishes will end up contributing to a mass tort fund used to settle abuse claims.

Parishes would have to contribute in order to get a “release” that would protect them from being sued—something that has happened in the Philadelphia diocese, Haverstick said.

“If the parish doesn’t get a release and everybody else gets a release, it’s the only entity left that can get sued,” he said.

Haverstick declined to speculate on how that may affect individual churches.

For churchgoers, nothing should change, said the Rev. Matthew Larlick of St. Joseph’s in Berwick, Columbia County.

“We still go to church,” Larlick said. “We still believe in God. We still believe in the 10 commandments and the five precepts.”

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