ROCKVILLE CENTRE (NY)
Reuters [London, England]
April 15, 2024
By Dietrich Knauth
A Catholic diocese in Long Island, New York has asked a judge to end its Chapter 11 bankruptcy, after failing to get support from about 530 sex abuse survivors on a proposed $200 million settlement of their claims against the diocese.
The Roman Catholic Diocese of Rockville Centre, New York, which serves about 1.2 million Catholics in Nassau and Suffolk counties, said on Friday that its bankruptcy had “run its course” after abuse survivors “overwhelmingly” voted against the diocese’s offer.
“The Diocese sincerely hoped that its offer of $200 million—in addition to very substantial insurance assets—would be accepted by the creditors,” the diocese wrote in a motion to dismiss filed in U.S. bankruptcy court in Manhattan.
James Stang, an attorney representing abuse survivors in the bankruptcy, said that the diocese’s failure to reach a deal was “unprecedented.”
In other Catholic bankruptcies, abuse survivors were allowed to propose their own bankruptcy settlement instead of being offered a binary choice between the diocese’s plan or nothing, Stang said.
The diocese filed for Chapter 11 bankruptcy in New York in October 2020, citing the cost of lawsuits filed by childhood victims of clergy sexual abuse. New York’s Child Victims Act, which took effect in August 2020, temporarily enabled victims of child sexual abuse to file lawsuits over decades-old crimes.
U.S. Bankruptcy Judge Martin Glenn is scheduled to hear the diocese’s request to dismiss its case on May 9.
Glenn warned last year that he would dismiss the case if settlement talks continued to stagnate, but he said he was not eager to be the first judge to kick a Catholic diocese out of bankruptcy.
Talks broke down in part over the diocese’s plan to protect all of its parishes and local affiliates from lawsuits as part of the bankruptcy settlement. Abuse survivors said those local organizations had not contributed enough money to the settlement to warrant the legal protections they would have received.
Stang said on Monday that a bankruptcy settlement could still be reached if the diocese makes its proposal more attractive to abuse survivors. Survivors might be more inclined to vote for a deal with better economics or non-monetary concessions, like an apology and pledge to protect children from abuse in the future.
“We think the parishes can afford to pay much more and still maintain their religious mission,” Stang said.
The diocese said that it had spent over $106 million on attorneys and other bankruptcy professionals since filing for Chapter 11, including $33 million to the attorneys representing abuse survivors.
If the bankruptcy is dismissed, abuse survivors would be free to continue their lawsuits against the diocese in New York state courts.
Richard Tollner, who chaired the official committee representing abuse survivors in the bankruptcy, said that the dismissal would send a strong message to other debtors who are “using bankruptcy to avoid accountability before state court juries.”
“If your plan does not have the support of the survivors’ creditors’ committee, your reorganization plan will fail,” Tollner said in a statement.
In re The Roman Catholic Diocese of Rockville Centre, New York, U.S. Bankruptcy Court for the Southern District of New York, No. 20-12345.
For Rockville Centre: Corinne Ball and Todd Geremia of Jones Day
For the creditors committee: James Stang of Pachulski Stang Ziehl & Jones