The Diocese of Rochester has asked the U.S. Bankruptcy Court to approve a $35-million settlement agreement with several of the major insurers involved in the diocese’s nearly two-year-old bankruptcy case. If approved, the settlement proceeds paid by the insurers will be available to satisfy claims of survivors of sexual abuse.
Diocesan attorneys filed a motion on May 27 with the United States Bankruptcy Court, Western District of New York, seeking approval of a settlement with underwriters at Lloyd’s of London, certain London market companies, Interstate Fire & Casualty Co. and National Surety Corp. A hearing regarding the petition has been scheduled for July 9 before U.S. Bankruptcy Judge Paul R. Warren.
“We believe this settlement, if approved, is a significant step forward in our goal of achieving a fair and equitable reorganization plan — the vast majority of which will be funded by our insurers — that will compensate the survivors of sexual abuse who have filed claims in our Chapter 11 case,” according to a statement issued by the diocese.
“While the funding provided under this settlement is only a portion of the eventual ‘Survivors Fund’ to be established to settle those claims, it is a significant and substantial one,” the diocesan statement also said, adding that if the settlement agreement is approved, it “will avoid further litigation between the Diocese and these specific insurers — legal proceedings that would be quite costly, reduce available funds for survivors and perhaps delay by years the conclusion of this process.”
However, in a separate motion filed with the court on June 8 by attorneys representing the Official Committee of Unsecured Creditors in the chapter 11 case, the committee has joined in requests made by several claimants seeking relief from the automatic stay in the case. The committee’s motion, if granted, would allow 20 separate lawsuits brought by sexual-abuse claimants to proceed in state court against the diocese. The motion seeks to use the process of the state courts to set values for the survivor’s claims. According to the petition, the 20 cases involve abuse by clergy and religious in the Diocese of Rochester between 1961 and 1985 and serve as a “representative sample of the more than 475 Sexual Abuse Claims filed in this Chapter 11 case.”
Diocesan officials, on the other hand, expressed their desire to stay on course with the mediation process.
“The Diocese has acted in good faith over the course of multiple mediation sessions and is committed to continuing those good faith negotiations with its insurers and the Creditors Committee,” according to the diocesan statement. “The Diocese believes that continued dialogue and negotiation among the Diocese, its insurers and the Creditors Committee that is guided by reasonable and realistic expectations on the part of all concerned and a dedication to swift and just resolution for survivors is the best and proper course to benefit survivors.”
The creditors’ committee comprises several survivors of childhood sexual abuse who had filed claims against the diocese under the New York Child Victims Act. The committee was appointed by the Office of the United States Trustee shortly after the diocese filed for reorganization on Sept. 12, 2019, under Chapter 11 of the U.S. Bankruptcy Code.
At the time of the diocese’s bankruptcy filing, Bishop Salvatore R. Matano explained that the diocese filed Chapter 11 because it would be unable to satisfy numerous claims that were filed after Aug. 14, 2019, when the Child Victims Act opened a one-year filing window for sexual abuse claims that previously had been barred by statutes of limitations.
Rochester became the first diocese or archdiocese in New York state to file for Chapter 11 protection. Since then, three other dioceses — Buffalo, Syracuse and Rockville Centre — have commenced Chapter 11 cases.