CHURCH RETIREMENT PLANS IN BANKRUPTCY

Few ministers can keep the loyalty of a modern-day congregation more than a few years.  Staff members are more likely to have longevity.  Thus, the question of whether a retirement plan will actually apply in a bankruptcy is likely to be rare.  Nevertheless, it can happen.

In the case of Re:  Roman Catholic Church of the Archdiocese of New Orleans, Memorandum and Opinion (ED BR La. 2022), the federal bankruptcy court faced an objection from a creditors committee as to the pre-petition retirement benefits owed to five priests.  The retirement plan was an obligation arising under Canon Law.  There was a monthly “maintenance” stipend and medical benefits.  The five priests were not on the Credibly Accused List.  During document discovery in the case, documents were produced from which the creditors committee claimed the five priests were credibly accused.  The Archdiocese objected on procedural grounds but did not protest against the allegation the five priests were credibly accused.  The Archdiocese previously consented not to pay retired priests already on the Credibly Accused List.  The bankruptcy court amended the Wages & Benefits Order previously entered to exclude payments to the five priests.

The management of a debtor in possession is particularly difficult, but management of a church or denominational level unit seems likely to be more difficult even than that.  Because the amount of the payments contemplated in the reported case were not stated in the opinion, it is difficult to know whether the economics justified the relief sought.  Other factors may have been involved. 

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