Tag Archives: CARES Act

Judge dismisses Buffalo Diocese’s attempt to get $1.7M Covid-19 loan

Judge dismisses Buffalo Diocese’s attempt to get $1.7M Covid-19 loan
By Jay Tokasz
https://buffalonews.com/business/local/judge-dismisses-buffalo-dioceses-attempt-to-get-1-7m-covid-19-loan/article_c01d9be2-8123-5dc4-a4ae-9e3a7e1f7a49.html

A federal judge in Rochester has ruled against the Buffalo Diocese’s efforts to secure a $1.7 million loan through the Small Business Administration’s national Paycheck Protection Program.

U.S. District Court Judge Elizabeth A. Wolford on Wednesday dismissed the diocese’s lawsuit against the federal agency that runs the loan program and refused to grant a preliminary injunction that would have forced the SBA into considering the diocese’s loan request.

Wolford said in a written summary judgment the “SBA did not exceed its statutory authority” in adopting a policy that excluded entities in bankruptcy from qualifying for the loans.

The diocese’s lawyers had argued that the SBA illegally excluded the diocese from applying for a share of the $659 billion Congress made available to businesses that keep employees on their payrolls during social distancing shutdown measures prompted by the coronavirus pandemic.

The Buffalo Diocese joined with the Rochester Diocese in asking the U.S. District Court for a preliminary injunction that would prohibit the SBA from denying the loan based on their bankruptcy statuses.

The Rochester Diocese sought $1.1 million from the SBA’s Paycheck Protection Program and was ineligible because it filed for Chapter 11 bankruptcy protection last September. The Buffalo Diocese filed for bankruptcy in February.

Government lawyers explained in court that the SBA adopted the bankruptcy exclusion to speed up loan processing and to ensure lenders that it wasn’t approving unacceptably high-risk loans.

Without the PPP loans, the dioceses argued that they “will be forced to lay off or furlough essential employees which will have a permanent effect” on how their Chapter 11 bankruptcy cases are administered.

The Buffalo Diocese in March eliminated the jobs of 21 employees, a fifth of its workforce, due in part to the “anticipated financial impact of the pandemic.” The cutbacks followed a 2019 fiscal year loss of $5 million for the diocese.

With Catholic Masses suspended during the pandemic, area parishes have been unable to bring in offertory collections. In turn, the parishes have been unable to meet their financial obligations to the diocese, the diocese’s lawyers said in court papers.

With stay at home directives in effect, the diocese “will struggle to continue making payroll payments,” which is the main eligibility requirement for the Paycheck Protection Program, lawyers argued.

Wolford said in her ruling that she was not convinced. She called the diocese’s explanations about the financial impact of the pandemic ban on church gatherings “vague.”

The diocese’s lawyers “point out that offerings have dropped off precipitously, but they do not state what percentage of their funding comes from parish assessments versus other sources,” Wolford wrote. “Plaintiffs further have not claimed that they need PPP funds in order to make payroll—indeed, there is no indication in plaintiffs’ papers that they have not paid their employees’ salaries or that failure to obtain PPP funds would somehow cause Plaintiffs to cease to operate.”

Lawyers for the dioceses also said that the SBA added the bankruptcy rule arbitrarily, even though nothing in the CARES Act passed by Congress and signed by President Trump limits the diocese’s eligibility for the funds.

Wolford’s decision said the CARES Act was “silent regarding the eligibility of debtors in bankruptcy to participate in the PPP” and nothing in the legislation required a bankrupt debtor be eligible.

“This detail was left by Congress for determination by the SBA,” she wrote.

Small businesses and other entities – including churches and religious organizations – that employ up to 500 people are eligible for the Paycheck Protection Program, which provides loans to cover payroll costs, rent, mortgages and utilities.

The loan, which requires no fees or collateral, is fully forgiven as long as at least 60% of it is used for payroll. If that requirement isn’t met, the loan must be repaid over five years at a 1% interest rate.

Several other dioceses around the country and some Catholic parishes in Western New York have applied for and received loans through the Paycheck Protection Program.

Buffalo Diocese facing backlash for seeking federal funds, relief in CVA cases

Buffalo Diocese facing backlash for seeking federal funds, relief in CVA cases
By Cayla Harris
https://www.timesunion.com/news/article/Buffalo-Diocese-facing-backlash-for-seeking-15251143.php

Advocates for survivors of sexual abuse are denouncing the Buffalo Diocese this week after the institution, temporarily headed by Albany Bishop Edward B. Scharfenberger, moved forward with two legal filings that activists say diminish victims’ experiences and could allow the diocese to dodge consequences for decades of alleged abuse and cover-up.

The most recent filing on Tuesday was a lawsuit against the federal Small Business Administration for denying the diocese’s application for relief under the CARES Act because of its ongoing bankruptcy proceedings. It followed a separate legal action on Saturday in bankruptcy court, in which the diocese argued that all cases filed against the institution under the state’s Child Victims Act, including those that also name local parishes and schools, should be permanently suspended.

Last summer, the act opened a one-year “look-back” window allowing survivors of sexual abuse to pursue previously time-barred cases against their alleged offenders. The Buffalo Diocese, the most-named defendant in claims filed under the act, is facing more than 250 actions.

“The Buffalo Diocese should not use the current pandemic as an excuse to evade responsibility for the decades-long abuse of children,” said Michael Polenberg, the vice president of government affairs for the victims advocacy group Safe Horizon. “Every survivor of childhood sexual abuse deserves to hold offenders – including negligent institutions – responsible for their actions. That is the promise of the Child Victims Act … and that’s what survivors deserve.”

All lawsuits lodged against the diocese have been frozen since February, when the institution filed for Chapter 11 bankruptcy, which allows for reorganization of assets instead of liquidation. Some cases that also name separate Catholic entities where the abuse allegedly occurred would typically be allowed to move to trial at a later date – a move the diocese said would open the door to a cumbersome and costly discovery process.

Buffalo Diocese spokesman Greg Tucker declined to make Scharfenberger, who took the helm of the scandal-plagued diocese in December, available for an interview on either topic.

On the federal stimulus funds, Tucker said the institution decided to sue the SBA because it “exceeded its authority” in denying money to an organization moving through bankruptcy proceedings. The CARES Act “makes no reference to disqualifying applications on the basis of an entity in Chapter 11 reorganization,” he said.

State Sen. Brad Hoylman, a Manhattan Democrat and CVA sponsor, said in a statement Tuesday that the lawsuit “is just the latest example of the church failing to take responsibility for decades of egregious misconduct. They should be ashamed of themselves.”

In reference to the proceeding in bankruptcy court, Tucker said suspending all cases would allow the diocese to negotiate settlements “without the distraction of piecemeal litigation” and would also make the payouts more equitable for all survivors, not just those who filed first.

“While the process continues, any lawsuits against the diocese are halted to allow the diocese and its creditors to come to agreement on settlement terms,” he said. “The action that the diocese recently filed is intended to provide the same ‘breathing spell’ for parishes, schools and other Catholic entities in the hopes of achieving a global resolution.”

Stacey Benson, an attorney with the Manhattan-based law firm Jeff Anderson & Associates that represents several plaintiffs suing the Buffalo Diocese, said the filing was an “unnecessary legal tactic (that) is insensitive to survivors of child sexual abuse who have already been deeply harmed by the abuse they suffered, as well as by the actions and inactions of top diocesan officials.”

Sorry, Senator Hawley. It’s Unconstitutional to Bail Out Churches with $350 Billion Small Business Aid. — American Atheists

Washington, D.C.—Today, the religious freedom watchdog organizations American Atheists, Center for Inquiry (CFI), Freedom from Religion Foundation (FFRF), and Secular Coalition for America (SCA) corrected Senator Josh Hawley’s claim that “the SBA [Small Business Administration] is WRONGLY telling churches and lenders that churches and religious nonprofits don’t qualify for the new #COVID19 relief program.”

Sorry, Senator Hawley. It’s Unconstitutional to Bail Out Churches with $350 Billion Small Business Aid. — American Atheists