Unclear bankruptcy rules challenge Catholics and Disciples: Nonprofit status may help determine legal precedents
The nonprofit status of the Catholic Archdiocese of Portland, Oregon, which filed for bankruptcy last month, and the Protestant-affiliated National Benevolent Association, which filed for protection in February, may help determine legal precedents for church bodies that say they are unable to meet their financial obligations.
The vast majority of organizations that file for bankruptcy protection are for-profit companies. Statutes and abundant case law set clear priorities for the court as it straightens out companies’ finances: creditors come first, shareholders second.