A Diocese bankrupt?

[J.R.]

I've just read that the Diocese of Tucson is filing for bankruptcy over the cost of settling lawsuits with the victums of the scandal that has hurt our Church and destroyed the lives of all those involved. The question that has been put to me by some of my Protestant brethren is, "how can a church file for brankruptcy?". Can someone help me in answering that question? Thank you and God Bless all here.

[Jermosh]

Originally Posted by J.R.

I've just read that the Diocese of Tucson is filing for bankruptcy over the cost of settling lawsuits with the victums of the scandal that has hurt our Church and destroyed the lives of all those involved. The question that has been put to me by some of my Protestant brethren is, "how can a church file for brankruptcy?". Can someone help me in answering that question? Thank you and God Bless all here.

Well the Church is not filing, the business of the diocese is. A diocese is a business entity that holds and does everything from banking, insurance, document holding, hiring professionals to perfrom secular duties, and other business agenda. In other words a diocese is a form of a legal corparation and its CEO is the bishop. Granted it is more then that, but in legal sense its seen as that.

[Amadeus]

Supplementing what has been posted above, may I add the following:

(1) There are 2 general ways the local Catholic Church in any given country, or in any U.S. State, to "exist" legally as a juridical person: (a) as a Corporation Sole; or (b) as a charitable organization incorporated as non-profit.

(2) Both are endowed the attributes of corporate life by "legal fiction." As a Corporation Sole, the local ordinary, i.e., the presiding Bishop, incorporates himself as the "sole corporation," holding the property and business of the Church in his name. As a charitable organization, the Diocese, headed by the Bishop, is incorporated as a non-profit corporation having the same or similar rights and privileges as an ordinary corporation.

(3) Individuals and "corporations" (considered as juridical persons by legal fiction) are both entitled to file for protection under Federal bankruptcy laws.

As a corporation (Sole or otherwise), therefore, the Diocese of Tucson has the right/privilege to avail itself of the protection of Federal Bankruptcy Laws.

These laws aim to provide a legal cover for individuals and corporate entities against catastrophic claims over their assets where there is a reasonable certainty that such an event would constrict their ability to continue operating or their very own survival.

In the meantime, the Diocese should not be constrained to operate its normal day-to-day business while it tries to re-organize its finances.