October 2023

Parishes, schools to be shielded from lawsuits in Archdiocese of Baltimore bankruptcy for now

A federal bankruptcy judge on Tuesday agreed to shield the Archdiocese of Baltimore’s parishes and schools from lawsuits, at least for now, in order to protect insurance policies that are likely some of the archdiocese’s most important assets.

The decision means that childhood sexual abuse survivors will not be able to file lawsuits against an individual parish or school if the institution was covered by the same insurance policy as the archdiocese.

The judge’s order shielding those institutions is preliminary. A legal fight over the church’s assets is almost certain to come later as plaintiff’s lawyers seek compensation and other benefits for sexual abuse victims in the bankruptcy.

The archdiocese’s lawyers on Tuesday presented the move as an effort to shield assets that will later be distributed among victims with claims against abusive members of the clergy and church officials that protected them.

RELATED: Maryland’s Child Victims Act takes effect: What to expect in the days ahead

If survivors file lawsuits against individual parishes that are covered by the same insurance policies as the archdiocese, their potential winnings in court would diminish the total amount available for distribution from the policies later, they said.

U.S. Bankruptcy Judge Michelle M. Harner

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The Purdue Case: Can the Rich Use Bankruptcy Law as Cover?

Upholding the Sackler release “would leave in place a roadmap for wealthy corporations and individuals
to misuse the bankruptcy system to avoid mass tort liability,” the solicitor general wrote to the Supreme Court. The justices agreed to hear the case
in December—and to pause Purdue’s plan in the meantime.

In sometimes stark language, a number of law professors argue in
amicus briefs that the rationale invoked by the Second Circuit panel is being
used to protect people outside bankruptcy and to strip survivors and others of
their fundamental right to sue and be heard, forcing some of them to take a
deal they don’t agree to. They brand the Sackler release as “
abusive,”
“moral hazard,” and a “descent into lawlessness” in Chapter 11. 

A group of Canadian municipalities and First Nations protest the
Sackler release—which voters did not get to approve separately—as barring
“anyone, anywhere, anytime, from filing an opioid-related claim against
thousands of individuals and entities—including generations of Sackler
family members born and unborn, along with officers, directors, trustees and
others for Purdue and its related entities—for their roles in directing,
assisting, and facilitating Purdue’s misconduct.”

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