The El Paso Catholic Diocese, faced with potential “astronomical” judgments in a dozen lawsuits alleging clergy sexual abuse, filed for bankruptcy reorganization Friday.
The 12 lawsuits involving 18 plaintiffs, filed between 2022 and 2025 in Las Cruces, allege sexual abuse by priests at a number of New Mexico parishes between 1956 and early 1982, when southern New Mexico was part of the El Paso diocese.
“First of all, let me say we don’t see it as a way to duck out of our responsibility,” El Paso Bishop Mark Seitz said in an interview with El Paso Matters. “It’s the only way, with the resources at hand, that we can begin to address this many claimants in an equitable way.”
El Paso Matters is seeking comment on the diocese bankruptcy filing from attorneys for those who filed suit in New Mexico alleging sexual abuse by priests.
The diocese’s petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code lists between $10 million and $50 million in assets and $1 million to $10 million in liabilities. The 18 people suing the diocese are the fewest number of sexual abuse plaintiffs that led to a bankruptcy reorganization among more than three dozen Catholic dioceses and archdioceses that have taken that path, according to research by Marie T. Reilly, a law professor at Penn State University.
Chapter 11 bankruptcy is a legal process that allows a business to reorganize its debts and operations under court supervision while continuing to operate. Another form of bankruptcy, known as Chapter 7, liquidates the assets of a business or organization to pay debts; that is not the path pursued by the El Paso diocese.
The diocese reorganization petition was filed in the U.S. Bankruptcy Court for the Western District of Texas.
Seitz said the diocese has been negotiating with attorneys for the people who brought the sexual abuse lawsuits, and court records show the lawsuits were paused in late 2025.
“It’s difficult in New Mexico. There’s no effective statute of limitations, and the awards that are being given in court judgments have been astronomical,” he said.
Seitz said the bankruptcy reorganization filing will allow the victims to recover damages while also protecting the El Paso diocese, which he said “is one of the least resourced dioceses in the country.”
The bankruptcy filing will have no immediate impact on the 56 individual parishes in El Paso and West Texas because they are legally distinct from the diocese, Seitz said. The individual parishes that are named in the New Mexico lawsuits are now in the Las Cruces diocese, which was created in 1982.
The Catholic Foundation for the Diocese of El Paso, which includes endowments that support church activities, also is a separate legal entity from the diocese and isn’t affected by the bankruptcy filing, the bishop said.
Seitz said the diocesan priests have been kept aware of the possibility of a bankruptcy filing, and were told Thursday that it would happen.
The El Paso diocese has insurance policies, which are expected to handle the bulk of any settlements with sex abuse victims, Seitz said. Some of the older assaults came at a time when the diocese didn’t carry insurance, which creates financial risks.
The bankruptcy reorganization, which lawyers have said will take a year or two to complete, will have financial implications for the diocese, Seitz said. But he said they don’t plan layoffs among the more than 50 diocese employees, or reductions to religious and other services provided by the diocese.
“Any kind of reserves that we might have been able to build up through the years, those are going to be gone. So it’s going to be difficult,” the bishop said.
The El Paso diocese has faced previous legal claims regarding sexual abuse by priests.
“We’ve been dealing with these cases, but it’s been like a relative trickle, maybe two a year, maybe three, and we’ve been able to work to mediate with them,” Seitz said. He said he can’t provide the amount of settlements paid previously because of confidentiality agreements requested by victims.
LIST: Members of clergy credibly accused of sexual abuse of minors in Diocese of El Paso
He said sexual abuse by priests around the world is “a nightmare.”
“If you could imagine the most egregious swing from being a person who’s called to love God and care for his people, you can’t imagine a turn that would be farther from that than what’s taken place in our past,” Seitz said.
“We acknowledge that it happened and we’re mortified, and we’ve been doing penance about it for a lot of years, and will continue.”
The El Paso diocese’s annual Mass of Atonement and Hope for sex abuse victims is at 1 p.m. Saturday at St. Patrick Cathedral, 1118 N. Mesa St.
How diocese bankruptcy reorganization works
Between 2004 and 2025, 37 U.S. dioceses and archdioceses sought bankruptcy protection because of clergy sex abuse litigation, according to Reilly, the law professor at Penn State University.
Eleven of the previous diocesan bankruptcy filings are ongoing. The number of sex abuse victims involved in the concluded bankruptcy cases ranged from 28 to 900, according to Reilly’s research. The concluded cases took between six months and six years to be completed.
Additionally, four Catholic religious orders and one parish have sought bankruptcy protection because of clergy sex abuse, according to Reilly.
“The federal bankruptcy law provides an extremely useful procedure for resolving, in a final and comprehensive way, exactly this type of liability problem, compared to the alternative, which (can be) decades and decades of complicated litigation,” she said in an interview with El Paso Matters.
In a bankruptcy reorganization, the debtor – in this case the El Paso diocese – proposes a reorganization plan to creditors. In this case, a committee of attorneys representing the sex abuse plaintiffs would represent the interests of those with lawsuits against the diocese. The debtor and creditors negotiate a reorganization, which would include a fund for payments to sex abuse victims.
The diocese said it will propose in its reorganization plan a 120-day period for any outstanding claims to be made regarding abuse by clergy, employees or volunteers of the diocese.
The bankruptcy judge – in this case, Craig Gargotta of El Paso – must approve any final reorganization plan.
The money for the settlement trust to pay abuse victims would come from insurance companies and from diocesan funds, Reilly said.
In previous diocesan bankruptcy cases, “most of the debtors have had to sell real property, and they have closed parishes, changed the way they operate,” she said. Some dioceses have borrowed against trust funds they control, such as those used for maintenance of cemeteries.
And dioceses have asked their parishes – even those not involved in sex abuse claims – to contribute money to the settlement fund.
“So, the way Catholic dioceses operate, which is very Catholic, is we need all of the parishes to pitch in to solve this lingering liability problem. And it’s kind of treated like it’s our family, you know, we’re all in the family together,” said Reilly, who is Catholic.
The reorganization plan also includes directions on how money from the settlement fund is to be dispersed to those who sued the diocese. The fund is administered by an independent trustee, who would decide the amount of payments to each creditor based on criteria established by the reorganization plan.
The El Paso diocese is the first in Texas to seek bankruptcy protection.
With the El Paso filing, all of the dioceses active in New Mexico during the height of the clergy sex abuse scandal from the 1950s through early 1980s – El Paso, Santa Fe and Gallup – have sought bankruptcy protection.
The Las Cruces diocese was created out of the El Paso and Santa Fe dioceses by Pope John Paul II in 1982 and is a co-defendant in some of the lawsuits involving the El Paso diocese. It has not sought reorganization through the bankruptcy process.
New Mexico was one of the epicenters of sex abuse by Catholic priests, in part because it was home to a religious order called Servants of the Paraclete, which provided rehabilitative services to priests from around the country. That included priests who had committed “sexual sins” against children.
Many of the priests treated at the northern New Mexico facility were allowed to return to the ministry, and many were sent to New Mexico parishes – including the El Paso diocese – where they sexually abused children entrusted to their care.
“It was a perfect storm, in a way. It seems that they got to know who each other was to some degree,” Seitz said of the abusive priests.
One of the priests named in the pending New Mexico lawsuits is David Holley, who was treated at Servants of the Paraclete and later sentenced to 275 years in prison for sexually abusing children at his parish in Alamogordo. He died in prison in 2008.
The future for the diocese – and abuse victims
Seitz said it’s important that El Paso Catholics continue to make donations to their local parishes. A part of those donations go to what is known as “cathedraticum,” which provides funding for administrative expenses for the diocese.
“And I know they’re going to be fearful or saying, ‘You know, we don’t want it to go to a settlement,’” he said.
“I hope people understand they’re part of this church and we have a responsibility to respond to these victims. None of us here have committed these crimes, but we’re part of this church made up of saints and sinners,” Seitz said.
The bishop said the El Paso diocese hasn’t had a credible claim of clergy sex abuse since 1998, which he credits to the Catholic church’s efforts to improve protection of children in the wake of one of its darkest episodes. The abuse occurred at an El Paso parish and the victim came forward to police in 2016.
The priest, Miguel Luna, was removed from the ministry by the diocese in 2013, according to church records. He was convicted in 2019 of 12 sex abuse charges and sentenced to 18 years in prison. Luna, now 76, is incarcerated at a state prison in Fort Stockton, Texas, and is eligible for parole in 2028, state records show.
“I directed the leadership of the diocese when I came (in 2013) that I wanted to get a new program for a safe environment. I wanted to find the best in the country, and I wanted our diocese to become a leader in that work. We haven’t done it perfectly, and you’re always learning, right? But I think we’ve, we’ve done pretty well,” Seitz said.
Reilly, the law professor at Penn State, said plaintiffs’ attorneys generally don’t like the bankruptcy process. But she said it can bring some benefits to victims of abuse.
“When your claim is going to be resolved in this kind of batch process, you’re not going to carry the burden of proof on each element of your claim based on the trial of the evidence. Your claim is going to be validated and valued based on this agreed procedure as part of the creation and implementation of the settlement trust,” she said.
In a bankruptcy proceeding, victims file an anonymized proof of claim. In a lawsuit trial, they would have to testify in public about their past abuse, and be subject to cross examination by the defendant’s lawyer.
“And for a lot of sex abuse claimants, the people don’t want to do that, they don’t want to have to sit in the courthouse and give testimony or try to recount the details of something horrible that happened to them years and years ago,” Reilly said.
At the end of the bankruptcy process, victims are paid a lump sum by the trustee, she said.
“You have to compare what happens in bankruptcy with your alternative. And in that, I think there are reasons to think that the bankruptcy processes would be preferable,” Reilly said.
Seitz said he will rely on his faith as the diocese and the victims of its former priests move forward.
“I’ve certainly been through a lot of experiences in my life, and a lot of the experiences have been hard. And I’ve come to see that God is greater than any of the struggles that I’ve had to face. I really do trust that the Lord will bring me and us through this.”
This is a developing story and will be updated.
The post El Paso Catholic Diocese files for bankruptcy reorganization, citing ‘astronomical’ potential judgments in priest sex abuse cases appeared first on El Paso Matters.
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