Editorial: Diocese Should Reject Bankruptcy

Buffalo News
August 12, 2019

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Observers are speculating that the Diocese of Buffalo may file for bankruptcy protection this week as it prepares to face a barrage of lawsuits from individuals making claims of clergy sex abuse. While some experts say it could, in some ways, be a fairer way to compensate victims, it could also allow the diocese to keep secrets about child sexual abuse and its efforts to hide it.

A Chapter 11 filing would also likely frustrate victims, who might prefer a prompt and public jury trial. For those reasons and others – including a history of cover-ups – the diocese should simply face the music.

Even though bankruptcy would buy the diocese some time, it would not make the civil claims go away. In other dioceses that filed for Chapter 11, victims who proved they were sexually abused received significant financial settlements or court awards.

The Child Victims Act, which became law in February, allows for a one-year look-back period that begins Wednesday. That enables victims of childhood sexual abuse to file claims that were time-barred by statutes of limitations. Potentially thousands of lawsuits could be filed across the state against individuals and institutions such as the Catholic Church, public and private schools, the Boy Scouts of America, day care centers and others that have been named in similar suits.

The Diocese of Portland, Ore., was the first to use bankruptcy to cope with sexual abuse lawsuits, in 2004. Eighteen other dioceses and archdioceses have done the same.

Declaring bankruptcy freezes legal proceedings against an institution, meaning no jury trials occur in state court. That minimizes the pretrial discovery process in which embarrassing details could surface about efforts that were made to cover up past crimes. Far fewer such details will emerge in discovery before a bankruptcy court proceeding.

If an institution is found to be using bankruptcy merely to avoid litigation or to hide assets, the court can find its filing to be in bad faith and shut down the proceedings.

A bankruptcy process that drags on for months is more likely, which is a source of frustration for victims of alleged sex offenders. According to The Wall Street Journal, a typical diocesan bankruptcy case takes more than two years to adjudicate.

Catholic church finance expert Charles E. Zech told The News that bankruptcy can be a fairer way to compensate abuse victims than trials in state courts, which handle cases in the order in which they are filed and may favor large verdicts or settlements in the early cases.