SYRACUSE (NY)
Post-Standard - Syracuse.com [Syracuse NY]
February 16, 2024
By Jon Moss
A much-heralded $100 million plan for the Roman Catholic Diocese of Syracuse to pay abuse survivors and end scores of lawsuits against the church may be in trouble.
A government-appointed trustee has asked a judge overseeing the diocese’s bankruptcy case to reject a proposed reorganization plan in part because she said the diocese doesn’t appear to have enough money to pay its share of the $100 million compensation plan.
Another possible hurdle is a key part of the plan — the requirement for survivors to waive their right to sue the diocese before they get money — is being challenged at the U.S. Supreme Court in an unrelated case.
Erin Champion, an assistant U.S. trustee, told the judge during a four-hour hearing in Syracuse last week that the diocese’s math “just doesn’t add up.”
The diocese, as of November, only had assets with a liquidation value of about $19 million, according to financial statements filed in court. It had $879,311 in cash available at the time. That could leave the diocese tens of millions of dollars short of the funding for the plan.
“Where’s that money coming from?” Champion asked in court.
Bishop Douglas Lucia announced the $100 million fund last summer, which was described at the time as the second-largest payment by a Roman Catholic institution and its affiliates in any Roman Catholic bankruptcy case.
He said the diocese would cover half of the $100 million, with the rest paid by parishes, schools, missions and Catholic Charities. If split evenly among the parishes, each would face an average bill of nearly $400,000.
The $100 million is what local Catholic institutions have agreed to pay on their own to survivors; any money from insurance companies would be on top of that money, officials said.
The diocese filed for bankruptcy in summer 2020 as it faced a growing number of abuse claims, which now total to more than 400. It has since proposed the reorganization plan and, if the plan was approved, could exit bankruptcy in the coming months.
The diocese, headquartered in Syracuse, has nearly 200,000 members across 116 parishes in seven counties, 10 missions and seven oratories. It employs about 3,000 people.
The creation of the $100 million fund was one of many issues discussed at the hearing last week before Wendy Kinsella, the chief bankruptcy judge for the Northern District of New York.
The second-floor courtroom in the James M. Hanley Federal Building was packed with more than a dozen lawyers, some of whom were from out of town and brought their luggage with them to the hearing. They represented the diocese, the diocese’s creditors, the U.S. Trustee’s office and the insurance companies for the diocese and its parishes.
Stephen Donato, the diocese’s lead bankruptcy lawyer, said the diocese is “comfortable” it can cover its part of the survivors fund. A financial official is expected to provide live testimony to that effect during the confirmation hearing for the diocese’s reorganization plan, he said.
“They’re still working out the funding sources, but we would never agree to this deal if we couldn’t get the money,” he said.
Donato said the diocese has investment funds from which it could potentially pull money. If the diocese is short, the proposed reorganization plan also allows for the church to pay up to $15 million over three years.
Some of the other lawyers representing survivors said in court they weren’t concerned about the diocese making good on its promise.
Taylor Stippel, of Jeff Anderson and Associates, said there should be “no doubt the money will be there.”
“We are confident and we know that the diocese and the parishes and the schools will be able to marshal that $100 million,” she said. “Because they agreed to it. Because they’ve signed off on it.”
Stippel said that while the diocese does not appear to have much money on hand right now, “it has all the ability in the world to get it.” She said the diocese could sell some of its investments, or take out various kinds of loans, to generate cash.
The parishes also appear to still be figuring out how to cover their portion of the tab. Their financial information was not disclosed in court, since they have not declared bankruptcy.
Timothy Lyster, a lawyer for parishes in the diocese, said the contributions were “a stretch for the Catholic family.”
“The parishes are still scraping to get this money together, as is typical in these cases,” he said.
Supreme Court ruling
A key part of the diocese’s proposed reorganization plan is also under legal threat.
Under the proposed plan, abuse survivors would need to agree not to pursue further legal claims against the diocese and more than 250 other Catholic institutions to be able to receive money from the $100 million fund.
The U.S. Supreme Court is expected to rule by the end of June in an unrelated case on whether bankruptcy courts are allowed to approve such releases, which could force the diocese’s plan to be reworked.
The U.S. Conference of Catholic Bishops, which is not a party to the case before the Supreme Court, said in court papers that the releases “provide the only viable means for the Catholic infrastructure in many communities to survive what has become decades of mission-crippling litigation.”
There is enough uncertainty that the judge overseeing the Rochester diocese’s bankruptcy case had suggested in December it be put on hold until the Supreme Court issues its decision, according to the Rochester Beacon.
Champion, of the U.S. Trustee’s office, said it “would not be prudent” for a reorganization plan to be approved with this type of release, when it could soon need to be reworked.
Kinsella ordered last week that the Syracuse diocese’s bankruptcy continue, with revisions to reorganization documents to be filed next month.
Staff writer Jon Moss covers breaking news, crime and public safety. He can be reached at jmoss@syracuse.com or @mossjon7.