⛪️New Chapter 11 Bankruptcy Filing - The Diocese of Rochester⛪️

The Diocese of Rochester

September 12, 2019

Source: Official Form 204, The Diocese of Rochester Chapter 11 Filing

Source: Official Form 204, The Diocese of Rochester Chapter 11 Filing

If you haven’t seen the wonderful movie “Spotlight” yet, we highly suggest you do. It’s a compelling — and disturbing — movie about silenced and shamed claimants who were abused at the hands of the Catholic Church. There’s no more appropriate visual image for these people and what they’ve gone through than a black Sharpie line covering their existence. ⬆️

The Diocese of Rochester is the latest in a long line of dioceses that have now filed for bankruptcy as a means to manage the carnage of decades of abuse, neglect, and secrecy.

Earlier this year, the New York State Legislature passed the Child Victims Act (“CVA”) and Governor Cuomo signed the legislation into law in February. The CVA (i) opened a one-year “window” through which time-barred child sex abuse claimants could lodge claims and (ii) extended “the statute of limitations for claims that were not time-barred on its date of passage, permitting such child victims to commence timely civil actions until they reach 55 years of age.” The result? 46 lawsuits involving 61 plaintiffs (plus another 12 demand letters indicating future suits). Chilling numbers.

Here’s another chilling number: “[s]ince the mid-1980’s, the Diocese has settled 44 claims related to child sexual abuse.” No wonder people today have lost faith in our institutions.

Per the Diocese:

The Diocese does not seek Chapter 11 relief to shirk or avoid responsibility for any past misconduct by clergy or for any decisions made by Diocesan authorities when addressing that misconduct. The Diocese does not seek bankruptcy relief to hide the truth or deny any person a day in court. In fact, the Diocese is committed to pursuing the truth and has never prohibited any person from telling his/her story or speaking his/her truth in public. The Diocese has publicly disclosed perpetrators. The Diocese has made and requires criminal referrals to be made for all credible allegations of sexual abuse. The Diocesan Bishop, The Most Reverend Salvatore R. Matano, has apologized for the past misconduct of the personnel of the Diocese and meets with victims at every opportunity in an attempt to bring comfort to such individuals, as did his predecessor. 1'he Diocese has established standards for the training and background assessment of all employees, clerics and volunteers who will likely interact with children and young people.

The bankruptcy is intended to streamline a claims process to promote equal treatment of the claimants. The Diocese grossed $21.8mm in the fiscal year that just ended June 2019 and has insurance policies; it recognizes that it has a “moral obligation to compensate all victims of abuse by church personnel fairly and equitably.” It hopes to use the bankruptcy process to prevent a race to the courthouse and depletion of any and all available funds to the benefit of those whose trials are first to the detriment of those whose come later.

But this isn’t just about the claimants. Per the Diocese:

Beyond the Debtor's obligation to all of its creditors, the Diocese has a fundamental and moral obligation to the Catholic faithful it serves, and to the donors who have entrusted the Diocese with the material fruits of their life's labor, to continue the ministries of the Church in fulfillment of the Debtor's canonical and secular legal purposes. In order to do this, the Diocese must survive.

Some faithful may believe that, going forward, their charitable gifts to any Catholic entity will be diverted from their intended purpose and used to satisfy the claims of the Debtor's creditors rather than to fund the ongoing ministries of the Church that benefit the faithful and their community.

That, frankly, is a bit painful to read. Sure, we get it: the Diocese provides many valuable services to many people in need. But statements like that reek of corporate-speak and makes it sound like the bankruptcy is meant to ensure survival rather than promote justice. It’s a shame.

So, we suspect this case will follow the usual playbook. The Diocese will seek a channeling injunction and set up a trust to address all claims, letting the trustee see what, if anything, can be extracted from insurance proceeds. The claimants will get some small reparation and life will move on. Just more easily for some than others.

  • Jurisdiction: W.D. of New York (Judge Warren)

  • Professionals:

    • Legal: Bond Schoeneck & King PLLC (Stephen Donato, Charles Sullivan, Ingrid Palermo)

    • Claims Agent: Stretto (*click on the link above for free docket access)