EL PASO, Texas (KFOX14/CBS4) — The Catholic Diocese of El Paso has filed for Chapter 11 bankruptcy protection, citing mounting financial pressure from clergy sexual abuse litigation and ongoing operating deficits, according to a court declaration filed by Chief Financial Officer Gregory J. Watters.

The filing, submitted to the U.S. Bankruptcy Court for the Western District of Texas, outlines the Diocese’s financial challenges and requests court approval to maintain essential operations during the reorganization process. The Diocese serves more than 650,000 Catholics across a vast 26,686-square-mile region in far West Texas, operating 58 parishes, mission churches, schools, and charitable ministries.

Church officials say the primary reason for the bankruptcy filing is the financial strain caused by clergy sexual abuse claims. The Diocese currently faces 12 pending lawsuits and anticipates additional claims before statutes of limitations expire. Leaders warn that legal defense costs and potential settlements could reach tens of millions of dollars—far exceeding the Diocese’s available unrestricted assets.

Without bankruptcy protection, officials said, early claimants could receive compensation while later survivors might receive nothing, a scenario the Diocese hopes to avoid through an orderly reorganization process.

The Diocese has struggled financially for years. For the fiscal year ending June 30, 2025, it reported approximately $15.36 million in expenses against $14.96 million in revenue, resulting in a net loss of about $401,700. Officials described the Diocese as a “Mission Diocese,” relying heavily on donations, parish assessments, and limited grants, which have not kept pace with operating costs.

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Compounding the issue, roughly 25% of the Diocese’s assets are restricted by donors for specific purposes and cannot be used to pay legal claims or general debts, limiting available funds for settlements.

In its filing, the Diocese asked the court to allow continued payment of employee wages, insurance premiums, utilities, and other critical expenses. Officials said any interruption in these services could disrupt religious, educational, and charitable programs across the region.

The Diocese employs 47 lay staff and four priests, with monthly payroll obligations of approximately $148,700. It also maintains insurance coverage for church properties, schools, and ministries, and pays roughly $1.48 million annually for insurance programs that protect facilities and personnel.

Church leaders say Chapter 11 provides the best path to compensate abuse survivors while preserving ministries, schools, and charitable services relied upon by communities throughout the region.

“Without Chapter 11 protection, adverse judgments could exhaust our assets and force immediate cessation of operations,” Watters stated in the declaration, urging the court to approve the Diocese’s initial requests to maintain normal operations during the bankruptcy process.

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