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Churches Are Still Filing Bankruptcy

posted by Pamela Foohey

Not only are religious organizations still filing under chapter 11. As in prior years, they continue to file under chapter 11 in line with fluctuations in consumer bankruptcy filings. Find a couple graphs below to show this. But first, some background.

In my prior work, I analyzed all the chapter 11 cases filed by religious organizations from the beginning of 2006 through the end of 2013. (I define any organization with operations primarily motivated by faith-based principles as religious.) I found that these chapter 11 cases were filed predominately by small, non-denominational Christian churches, which mainly were black churches (80% of more of their members are black). And, also, that the timing of the filings tracked consumer bankruptcy cases (chapters 7, 11, and 13), not business bankruptcy filings, but lagged by one year. That is, if consumer bankruptcy filings decreased in a given year, religious organizations' chapter 11 filings decreased in the next year. I linked this result to how religious organizations' leaders came to think about using bankruptcy to deal with their organizations' financial problems.

NumbersSince my original data collection, four years has passed. I thus recently identified all the religious organizations that filed under chapter 11 between the beginning of 2014 through the end of 2017. During these four years, religious organizations continued to file, but in smaller numbers per year, as shown in this graph (note: I count jointly-administered cases as one case).

Between 2014 and 2017, consumer bankruptcy filings declined. Chapter 11 business filings remained steady. In accordance with prior years, religious organizations' chapter 11 filings during these four years generally tracked consumer bankruptcy filings, lagged by one year. Consumer filings peaked in 2010, while religious organizations' filings peaked in 2011, as evident in the below graph (note: consumer filing data is from the Administrative Office of the United States Courts, Table F-2 ,U.S. Bankruptcy Courts - Business and Nonbusiness Cases Filed, by Chapter of the Bankruptcy Code).

Comparison

Finally, a note on Catholic dioceses' cases. When people think about churches filing bankruptcy, they often first think of Catholic dioceses. Since 2006, a total of 14 dioceses have filed under chapter 11. That is about one case per year. Between 2006 and 2017, a mean of 79 religious organizations filed chapter 11 per year, including that one diocese per year.

More analysis--such as in which districts religious organizations mainly file and congregation demographics--to come.

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