Diocese files for Chapter 11 reorganization - Catholic Courier

Diocese files for Chapter 11 reorganization

GATES — In the wake of nearly 50 lawsuits filed against it since New York’s Child Victims Act took effect Aug. 14, the Diocese of Rochester filed for reorganization Thursday, Sept. 12, under Chapter 11 of the U.S. Bankruptcy Code.

The petition was filed with the U.S. Bankruptcy Court Western District of New York Thursday morning. The court documents were signed by Bishop Salvatore R. Matano; Lisa M. Passero, diocesan chief financial officer; and Stephen A. Donato, an attorney for the diocese.

“This is a very difficult and painful decision,” Bishop Salvatore R. Matano said in a video and letter to parishes released Sept. 12. The bishop read the letter at the beginning of a Sept. 12 press conference at the diocesan Pastoral Center.

“But after assessing all reasonable possibilities to satisfy the claims, reorganization is considered the best and fairest course of action for the victims and for the well-being of the diocese, its parishes, agencies and institutions,” he said. “We believe this is the only way we can provide just compensation for all who suffered the egregious sin of sexual abuse while ensuring the continued commitment of the diocese to the mission of Christ.”

According to the United States Courts website, Chapter 11 is a voluntary action taken by organizations to settle claims on which they owe while remaining intact.

According to the petition, the Rochester Diocese has 200 to 999 creditors, estimated assets of $50 million to $100 million, and estimated liabilities of $100 million to $500 million.

As part of its filing, the diocese submitted Form 204, listing creditors with the 20 largest unsecured claims. Nineteen of the 20 were anonymous creditors represented by attorneys; each such claim was labeled as a “CVA lawsuit” and estimated at a minimum of $100,000.

The Child Victims Act opened a one-year “window” during which child sexual-abuse claims could be filed in cases that had previously been barred by a statute of limitations. As of noon on Sept. 12, 45 claims had been filed against the Rochester Diocese since the CVA window opened.

“As a result, the diocese now faces a significant number of claims of sexual abuse of a minor, all dating back decades,” Bishop Matano said in the video, noting that the diocese has not received a contemporaneous report of sexual abuse of a minor since 2006. “Litigation cost and settlements or jury awards will exceed our resources, and the diocese will be unable to litigate or settle these claims.”

The bishop went on to explain that “a Chapter 11 filing stops the collection of debts and legal actions and enables the diocese to form a reorganization plan that will detail how available assets will be used to settle claims and negotiate reasonable settlements. Had the diocese not filed under Chapter 11, it would face multiple civil actions, a slow, unpredictable and costly process that would require years of court involvement, and those claimants who filed suits first would receive all available funds to pay victims. As a result, later claimants would receive nothing. Most importantly, such lengthy proceedings delay justice for the victims and only prolong their pain and suffering.”

As part of the reorganization plan, which must be approved by the bankruptcy court, the diocese intends to create a victims’ fund, with a pool of money from the diocese and its insurance carriers. Bishop Matano emphasized that the Chapter 11 proceedings are not expected to directly impact the 86 parishes in the Rochester Diocese’s 12 counties, explaining that parishes are separately incorporated under the state’s Religious Corporation Law.

He further noted that such affiliated agencies as Catholic Charities are similarly protected through their separate incorporation under the state’s Not for Profit Corporation Law. Among other separately incorporated affiliated agencies are the Catholic Courier, St. Bernard’s School of Theology and Ministry and Providence Housing Development Corp.

During the press conference, Bishop Matano noted that the size of monetary awards for victims will be determined by the bankruptcy court.

Although Bishop Matano did not give a timetable on how long the bankruptcy proceedings will last, he said in his letter that “the diocese’s goal is to bring the Chapter 11 process to a conclusion as soon as is possible.”

Toward the end of the press conference, Bishop Matano grew emotional as he praised the people of the Rochester Diocese for remaining supportive during this rocky chapter of diocesan history.

“It’s very easy to have faith in the best of times. It’s so difficult to have faith in times as challenging as these,” he said.

To report a case of possible sexual abuse and to receive help and guidance from the Rochester Diocese, victims are encouraged to contact the victims’ assistance coordinator: Deborah A. Housel 585-328-3228, ext. 1555 800-388-7177, ext. 1555 E-mail: victimsassistance@dor.org.

Additional Information

Letter to the Faithful: Sept. 12, 2019
Reorganization: FAQ
Reorganization: Key Information
Creating a Safe Environment 

Tags: Diocesan Bankruptcy Updates
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