Long Island Diocese Files for Bankruptcy over Sex Abuse Lawsuits

By Alex Costello
Patch.com
October 1, 2020

https://patch.com/new-york/rockvillecentre/long-island-diocese-files-bankruptcy-over-sex-abuse-lawsuits

Bishop John Barres said Chapter 11 bankruptcy is the only way for the Diocese of Rockville Centre to "ensure a fair and equitable outcome for everyone involved." (Shutterstock)

ROCKVILLE CENTRE, NY — The Diocese of Rockville Centre announced Thursday it will file for bankruptcy because of the vast number of lawsuits it is facing from sexual abuse survivors. The diocese said the filing should not affect parishes or Catholic schools.

According to Bishop John Barres, the diocese is facing more than 200 lawsuits under the Child Victims Act — a law that allowed sexual abuse survivors to file suit against their abusers if the statute of limitations had passed. Disputes with the diocese's insurers also led to the bankruptcy decision, Barres said.

"We believe that this process offers the only way to ensure a fair and equitable outcome for everyone involved, including abuse survivors whose compensation settlements will be resolved by the courts," Barres said. "This decision was not made lightly, but, with the passage of the Child Victims Act, the failure of the diocese's insurers to honor their contractual obligations and the number of suits filed to date, it has become clear the diocese would not able to continue its spiritual, charitable and educational missions while shouldering the increasingly heavy burden of litigation expenses associated with these cases."

Last year, the diocese tried to have the cases against it — and the Child Victims Act — struck down by a court, claiming the law violated the state constitution and the diocese's rights.

Some parishes are named in lawsuits, but the diocese said it will petition to have those cases brought under the umbrella of the diocese's settlement. Parishes and Catholic schools are separate legal entities from the diocese.

"Filing for Chapter 11 (bankruptcy), we believe, is the only way for the diocese to ensure a fair and equitable outcome for everyone involved," Barres said. "That is because the bankruptcy court will centralize all litigation and oversee a settlement that ensures that no survivor is left out or gets unfair compensation at the expense of another survivor."

Mitchell Garabedian, who is representing 23 of the people who are suing the Diocese of Rockville Centre, said the bankruptcy is of the diocese's own making.

"Clergy sexual victims will now seek justice and validation through the U.S. Bankruptcy Court," he said in a statement. "Legal discovery of secret files, names of perpetrator priests and negligent supervisors and the identity of assets will be sought through the bankruptcy court. Transparency will continue to be pursued in the bankruptcy court so that victims can try to heal."

Under Chapter 11 bankruptcy, the diocese must submit a plan of reorganization to the courts. It will also allow the diocese to reach a settlement in the many lawsuits it is facing.

The diocese has already been facing financial troubles. In October 2019, it implemented cost-saving measures that it said created $3.5 million in savings. And this August, it cut staff in its Rockville Centre office by 10 percent, which will create another $5 million in savings annually.

The coronavirus pandemic also impacted the diocese's coffers. The diocese said about 40 percent of its annual revenue comes from offerings collected at Mass. But with services canceled and reduced for so long, that income has dropped precipitously.

Despite the bankruptcy filing, the diocese said it still has enough cash to maintain operations. It said it will fund its operations and ministries during and beyond the restructuring process, pay vendors, and pay employees their normal wages. It also said the filing won't affect employee benefits.

Before the Child Victims Act was passed, the diocese started a voluntary program called the Independent Reconciliation and Compensation Program, which paid settlements to survivors of abuse by clergy. Through the compensation program, the diocese has paid more than $62 million to about 350 abuse survivors.

"Please know that I am praying for each and every one of you and your families and, in a special way, for the survivors of clergy sexual abuse," Barres wrote in a letter to the diocese. "I also pray that through this restructuring process, the diocese can emerge stronger, having resolved these issues with dignity and fairness and put everyone in a better position to move forward and heal."