The Catholic Church of Guam to declare bankruptcy?

Story here.

  1. Is this the right way to “solve” an ongoing problem and
  2. How is it they can declare bankruptcy and not involve the main church? In my opinion the Catholic Church is the Catholic Church, so how can the main church not be held liable?

As far as your second question goes, I note that the McDonald’s that used to be down the street from me has gone out of business, but the national chain remains.

I note that there is a difference between between an independent franchisee going out of business due to sales, and a parent church suddenly not being held responsible for a part of that church’s organization. It would be more like if Kellogg’s got sued because glass chips were found in Famous Amos cookies, and they said that the division that sold those cookies could declare bankruptcy without effecting the parent company.

As for #2, the Church being an international organization, units are incorporated within different legal jurisdictions.

I believe that within the US, each diocese is actually incorporated separately within their respective states.

So, if you were to sue “the Catholic Church”, the suit would be named ‘Czarcasm v. Catholic Archdiocese of Portland’ as opposed to ‘Czarcasm v. The Catholic Church’.

From the article:

It was the Vatican, not the local archdiocese, that had control over if and when he was removed, and it was the Vatican that punished him.

Yes, but the placement and discipline of bishops is not a legal matter.

Bankruptcy is a legal proceeding, so it would be handled in the jurisdiction (courthouse) in which the church is incorporated.

Should it be that way, if the local church is not truly independent? Can Amazon not be sued if something disastrous happens at one of the divisions not located in the same area as the parent company?

Should it be that way? I don’t know, that’s a good question.

Someone in Guam (for example) would clearly not have standing to sue an organization based in Vatican City, as the courts in Guam have no jurisdiction over what goes on in the Vatican. Similarly, the Guamanian not being a citizen of the Vatican, would have no standing to sue in a Vatican court.

Guamanians would only have standing to sue in a Guamanian court, which is why they have to sue the Archdiocese based in Guam.

What assets will be liquidated by this local bankruptcy? Is it the local diocese that owns the buildings, land and content, or does it all belong to the main church? The article mentioned this:

With what assets are these claims to be paid with?

Typical assets of the corporation. It’s Chapter 11. Chapter 11 is a reorganization of the corporation with a debt repayment plan. It requires all debtors to submit their claims prior to the plan being finalized. So what it’s really doing is it will make the current Archbishop step down and put the church under new leadership and it will let them know the full extent of the claims against it. It also routes any lawsuits through the bankruptcy courts, so if anyone else wants to come forward, they have to go through bankruptcy court rather than civil court. This tends to reduce the award given or even nullify it since the goal of the bankruptcy court is to satisfy debts rather than act punitively. It’s also highly likely that any claims after it emerges from bankruptcy for actions prior to the bankruptcy will be dismissed, so it basically provides a window of ‘speak now or forever hold your peace.’ Again, Chapter 11 is about knowing about all debts and figuring out how to pay them off more than trying to get out of paying them.

Which is what? What assets do the local incorporated church actually own independent of the main church?

Probably depends on how the church is legally incorporated. I mean, if there’s a “Archdiocese of Guam, LLC” or some such entity that technically owns the facilities(churches, schools, etc.) and pays the employees (priests, teachers, etc.), then that’s THE church as far as the legal system is concerned. The Vatican likely doesn’t own any of that stuff, so they’re immaterial as far as the law is concerned.

Another way to look at it is like how companies are organized- they often have either geographical or functional operating companies- for example, Sam’s Club is part of Walmart, but in reality, there are companies called Sam’s West and Sam’s East that are whollly owned by the parent company. This means that their stock is owned by the parent company and they call the shots, but that they’re legally separate entities, so if Sam’s East is sued and loses, Wal-Mart the parent company isn’t on the hook.

I imagine the Church is even more divested- I doubt the Vatican actually owns much if any of the assets outside of Rome proper- they’re probably limited to dictating the doctrine and the dogma, and probably with personnel decisions at each diocese to some degree (not sure if that’s limited to the appointment of bishops alone, or if they have a say about parish priests).

That’s a very, very complicated question and the answer is that it depends. There are churches owned by the diocese and some owned by the parish to further complicate things, there are charitable donations that are restricted by the donor. For instance, if I - ‘Rich Catholic McGee’ - donate a building for a youth center, the Attorney General of the area would have to determine if that building could be liquidated to pay off a debt of the diocese. There’s a good chance they would say that it would not since the donation was for a building that benefited the youth in a particular community, rather than just a general “Here, have some money.” The AG would have to determine whether or not paying a lawsuit debt was in keeping with the intention of my donation and arguably it would not be.

There is also quite a bit of argument over who ‘owns’ a church. Is it the corporation or a subset of the corporation under the control of the parishioners? That’s a complicated legal question and different states come down on it in different ways. Mostly they hold that parishes are controlled by a diocese, but are in fact their own independent entities. So it might be seen in this way, let’s pretend that my mother gives me her power of attorney so that I control all of her assets. Let’s further pretend that I make a bad investment and go bankrupt. This does not give my creditors the right to pursue my mother’s property simply because I control it. While I may exercise control, the property is still my mother’s. In a similar way, the diocese controls the parish property, but it may not really ‘own’ it in a legal sense.

You might see something similar to Diocesan hospitals and schools. In those cases, they may actually be incorporated as separate entities under the control of the Diocese.

As for what could be claimed, there will be unrestricted funds that they have access to as well as specifically Diocesan property (typically things like their office building and bishop’s residences, sometimes random property that it has accumulated over the years, although sometimes that will be donor restricted as well.)

If by “the main church” you mean the worldwide Catholic church, the worldwide church owns virtually nothing separately from its dioceses and, in Guam, probably nothing at all. The Diocese of Guam is the worldwide Catholic church in Guam. But the worldwide church, contrary to popular perception, is a highly decentralised movement, so assets tend not to be owned centrally, by a Vatican agency, but locally, by a diocese, or by the local or regional province of a religious order.

It’s likely that the diocese of Guam owns the parish churches in Guam, and the parish residences, either directly or through a trust structure. But in fact it’s possible that ownership of these is even more decentralised, and that each parish owns its own assets.

There would also be religious orders in Guam with varying assets - monasteries, convents, possibly schools or hospitals; that kind of thing. These assets typically belong to the religious orders concerned, and not to the diocese.

As for the #2, as I understand it some ski areas have a separate corporation for each ski lift, so yes I can see how the church is local and separable.

He could, in two situations:

  1. if the alleged damages had taken place in Vatican territory, or
  2. if he had a contract which indicated “Vatican courts” as the court of reference in case of litigation. The quotes are because there are two different “Vatican courts”: RCC courts (Canonic Tribunals or Rota) which are not necessarily based in Vatican territory and which solve issues according to the Catholic Church’s legal code (Canon Law), and Italian tribunals which solve issues either not covered by Canon Law or which the treaties between the Vatican and Italy assign to Italian courts (<— damn that was a long sentence).

The Roman legal system included those of their subjugated peoples; this has left most of the world with the custom or legal requirement to indicate which courts will be involved in case of conflict. Normally when more than one legal demarcation is involved, this will be one of those locations. Back in the 1990s, Telefónica’s subsidiary Terra, an ISP providing service in Spain and most of the Americas but not in the US, got into some legal trouble for making the courts of record be Miami.

It can be lower: a convent, a parish. My house is built on land donated to a builder’s coop by the local parish. The Spanish cooperativist movement of the 1950s-70s saw quite a lot of donations like those; a couple of bishops tried to put their foot down and were told “I don’t tell you what to do with your land, don’t tell me what to do with mine.”

Builder’s coop: a cooperative formed for purposes of building housing which will be occupied by the cooperative’s members.

For parishes assigned to specific Orders, the Order decides who goes where; a Province is an Order’s equivalent of a Diocese and their boundaries are unlikely to match (Provinces tend to be a lot larger; also, Order officers such as Priors, Abbots and Provincials are much more likely to be elected). For secular parishes (confusing term: it means those who aren’t assigned to any Orders), the organization within a given diocese is the Bishop’s job. The specific procedures to move a priest between dioceses/provinces changes from organization to organization and may even change from location to location (some dioceses/provinces have closer working relationships than others for historic, cultural or geographical reasons).

What Guam is doing isn’t new. At least 17 Diocese of the Catholic Church have declared bankruptcy in the US. Portland, Tucson, Spokane, and many others were because of judgments expected (and gotten) against them for sexual assault cases.

The bankruptcy doesn’t mean that the victims won’t be paid. For example, Portland settled almost $75 million dollars in sexual assault claims, yet continued to function and have been paying off the settlement. Insurance paid part and they sold some non-religious non-school property.

I initially thought I’d be able to do a bit of research, offer a tiny bit of insight into the legal issues, and offer up a very brief consolidation of the legal issues. Turns out, not so much.

It’s a highly convoluted question, with multiple types of law involved. Bankruptcy, of course, but also corporate law (not all Archdiocese are incorporated the same way), RFRA and Canon law are all a part of it. And each of them are different based on the location where the abuse occurs. There’s been some rulings on some issues, but by no means is there a set way of doing things.

Most of the bankruptcies have resulted in settlements without having to go through the final steps of rulings on whether the Vatican can be sued (although there are pending suits against the Vatican, I could find no rulings on the merits).

If anyone has the desire, or more time than I do, you can start with this article.

I’m actually more familiar with how orders work than with your garden-variety parish does- I went to a Jesuit high school, and was part of the work-study program. This meant that I basically answered the phones for the community after-hours, and got to know a lot of the priests and brothers fairly well. Also, my brother is a teacher at our high school (not a Jesuit, but just a lay teacher), and keeps me up on how many of the Jesuits we know are doing and what they’re up to these days.

So basically I know how the Jesuits work, and have a very unclear idea of how they interact with their local diocese/bishop. But what other non-order priests do is a total mystery to me- do they live at the church? Are they paid a salary?