Court Order to Pay Pensions Leads Archdiocese of San Juan to File Bankruptcy
The U.S. Supreme Court denied the archdiocese’s application for a temporary reprieve from a court order to pay $4.7 million to both retired and active teachers; however, filing for bankruptcy temporarily freezes all litigation.
The Roman Catholic Archdiocese of San Juan, Puerto Rico, filed for bankruptcy amid a legal battle over the payment of teacher pensions.
According to news reports, enrollment in Catholic schools has declined as residents have left the territory due to a 12-year recession, and the devastation caused by Hurricane Maria last year has exacerbated the problem.
In 2016, the archdiocese notified several hundred teachers that their pension payments were being stopped because payouts exceeded contributions. The teachers filed a lawsuit, and earlier this year, a judge ordered the archdiocese to pay $4.7 million to both retired and active teachers. Among other things, the teachers’ alleged in their original complaint that the multiemployer plan set up by the church for Catholic School employees was set up as an Employee Retirement Income Security Act (ERISA) plan, but plan fiduciaries, including service providers, failed to comply with ERISA.
The U.S. Supreme Court denied the archdiocese’s application for a temporary reprieve from the pension judgment; however, filing for bankruptcy temporarily freezes all litigation, giving the archdiocese time to negotiate a plan to pay creditors.
“The archdiocese no longer has money to operate,” Carmen Conde, an attorney for the archdiocese, told The Associated Press. “The embargo caused an economic and administrative crisis.”
As a result of the embargo, according to Conde, about 75 employees of the archdiocese have been laid off, dozens of parishes have been negatively affected, all charity work has stopped, the archdiocese cannot pay its utility bills and it is relying on volunteers to keep functioning.