Tag Archives: Catholic Diocese of Rochester

Buffalo Diocese files for bankruptcy after hundreds of sex abuse claims

Buffalo Diocese files for bankruptcy after hundreds of sex abuse claims. Albany Bishop Edward B. Scharfenberger has led the diocese since December.
By Cayla Harris
https://www.timesunion.com/news/article/Buffalo-Diocese-files-for-bankruptcy-after-hundred-15091849.php

The Buffalo Diocese, temporarily headed by Albany Bishop Edward B. Scharfenberger, filed for bankruptcy Friday morning as it grapples with hundreds of lawsuits alleging decades of child sexual abuse and cover-ups.

It is the second New York diocese to file for Chapter 11 bankruptcy – which allows for reorganization of assets instead of liquidation. The Diocese of Rochester filed for bankruptcy in September. The decision was largely anticipated as the Buffalo diocese, facing more than 250 lawsuits over the past six months alleging sexual abuse, has emerged as the most-named defendant in all Child Victims Act cases.

The state’s Child Victims Act in August opened a one-year window temporarily eliminating the statute of limitations for civil cases involving sex crimes. Since then, more than 1,600 cases have been filed statewide, many of them resurfacing decades-old allegations.

In a filing in the U.S. Bankruptcy Court in the Western District of New York – first reported by The Buffalo News – the Buffalo Diocese identified $10 million to $50 million in assets and $50 million to $100 million in liabilities. In court filings, Scharfenberger asserted that the filing was necessary “in order to respond to claims stemming from the Child Victims Act in an equitable and comprehensive manner, and to reorganize the financial affairs of the Diocese in order to permit it to continue to fulfill its ministries to the Catholic faithful of the Diocese.”

“We have no more urgent work than to bring about justice and healing for those harmed by the scourge of sexual abuse,” Scharfenberger said in a Friday statement.

The decision puts all lawsuits against the diocese on pause as leaders determine how best to address the allegations and compensate accusers. It does not affect the daily operations of local parishes.

Scharfenberger, who is temporarily leading the Buffalo Diocese after the resignation of its former Bishop Richard Malone in December, will address the media in Buffalo at a 1 p.m. news conference. He had been weighing the decision for months, repeatedly telling reporters that a decision would come “soon.”

“Whatever we do has to be done in a way that puts victims first,” Scharfenberger told Albany reporters in December, acknowledging that bankruptcy could freeze litigation but may also offer more equal payouts to survivors who have filed claims. “We want to look at all of those things, and then that might be the best way to go.”

He said at the time that the Albany Diocese is not considering a bankruptcy filing, and likely would not for “the next year or so.” The Albany Diocese has also faced its share of Child Victims Act cases, though far fewer, at about 65. The Albany Diocese serves about half the number of Catholics as the Buffalo Diocese.

“The decision in Buffalo does not affect the Diocese of Albany in any way,” Albany Diocese spokeswoman Mary DeTurris-Poust said in an email. “Until we know the full financial scope of the CVA as it relates to the Diocese of Albany, we cannot and will not make any decisions. We have nothing to announce, other than that we continue to respond in justice to survivors of abuse and urge anyone who has suffered such abuse to come forward.”

Survivors and attorneys, reacting to Friday’s filing, criticized the decision as a roundabout way of denying victims their day in court. They noted that bankruptcy allows the diocese to avoid releasing certain information and files about priests and clergy accused of abusing children – documents that would typically be unearthed during the discovery process.

Manhattan-based attorney Jeff Anderson, who represents dozens of survivors suing the Buffalo Diocese, said the diocese “is using bankruptcy to continue to conceal the truth about predator priests.”

State Sen. Brad Hoylman, D-Manhattan, a sponsor of the Child Victims Act, said the filing could help reveal “how deep the pockets are of the institution” – but at the expense of preventing survivors from speaking out in front of a judge in a public courtroom.

“It’s despicable that an institution that was responsible for the abuse of thousands of young people across the state of New York would try to hide behind the bankruptcy laws to prevent these individuals from receiving the entirety of the claim due to them,” he said.

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.

Facing 250 sex abuse lawsuits, Diocese of Buffalo declares bankruptcy

Facing 250 sex abuse lawsuits, Diocese of Buffalo declares bankruptcy
Second diocese in New York to file
By Charlie Specht and Eileen Buckley
https://www.wkbw.com/news/i-team/facing-250-sex-abuse-lawsuits-diocese-of-buffalo-declares-bankruptcy

BUFFALO, N.Y. (WKBW) — The Catholic Diocese of Buffalo, which is facing nearly 250 lawsuits involving clergy sexual abuse, has declared bankruptcy.

Aside from the obvious financial implications, the diocese’s formal Chapter 11 bankruptcy filing means that many of the victims of clergy sexual abuse may not anytime soon get the answers that have long been hidden in secret diocesan archives regarding pedophile priests.

But there is still a chance that those hidden files could be forced as part of a bankruptcy settlement, as has happened in other dioceses.

Because the cases will soon be shifted from state civil court to U.S. Bankruptcy Court, survivors of clergy sexual abuse are likely to receive compensation, though it is unclear how much per case the diocese would be required to pay out.

According to bankruptcy documents, filed in federal court, the Buffalo Diocese is facing between $50 million and $100 million in estimated liability.

Apostolic Administrator Bishop Edward Scharfenberger appeared in U.S. Bankruptcy Court in Buffalo Friday morning just hours after filing for Chapter 11 protection for the Diocese of Buffalo.

Scharfenberger later appeared at a news conference at the diocese with attorneys.

“I’m careful not to use the word bankruptcy, even though we are in a bankruptcy court, because a lot of people are under the impression that the diocese is running out of money – we can’t meet our obligations to our employees – which is not true,” Scharfenberger told reporters.

According to the court filing the diocese owes $3.5 million to a list of 20 top creditors. M&T Bank tops the list at $1.6 million, but the other 19 are victims who filed child sexual abuse lawsuits against the diocese. But there are actually more tahn 250 cases filed against the diocese.

U.S. Bankruptcy Court Judge Carl Bucki held what he called an “emergency hearing” hours after the filing.

Bucki called the bankruptcy an “extraordinary process”.

The judge asked if priests with substantiated allegations against them are being paid by the diocese.

7 Eyewitness Nee asked that question at the news conference with attorney Steve Donato responding.

“To the extent that there is a claim owned to a clergy on substantiated abuse list, which is on the website, to the extend that there were any funds owed to them as of today due prior to the filing — those will not be paid,” replied Donato.

Bishop Scharfenberger says Catholic schools and parishes are not part of bankruptcy filing.

“The health of the diocese is in the health of it’s parishes and the same with catholic charities and other affiliated agencies – they are not involved in this,” responded Scharfenberger.

The bishop says no parish donations will be touched and remain separate from bankruptcy.

“But not for the purposes of doing settlements — in other words – no money comes out of collections in order to resolve claims,” Scharfenberger remarked.

The bishop says the filing is “not a stunt” to deflect from the lawsuits filed against the church.

The next bankrupcty court hearing is schedueld for March 26th at 10 a.m.

The bankruptcy means the church could be forced to sell properties and to make appeals for more money from parishioners, but it also paves the way for the Catholic Church in Western New York to — after its debts are paid off — emerge from the crisis with its mission and services still intact.

The dramatic move comes after the Diocese of Rochester became the first Roman Catholic diocese in New York State to file for bankruptcy on Sept. 12.

It is no doubt one result of the Child Victims Act, which was passed in January 2019 and allows victims of child sexual abuse in all institutions — not only the Catholic Church — a one-year “window” period in which they can sue the institutions to prove they were responsible for the abuse.

To date, more than 300 Child Victims Act lawsuits have been filed in Western New York.

At least 250 lawsuits allege abuse by clergy or employees in the Diocese of Buffalo, making the diocese the most-sued entity in all of New York State under the new law.

In December, Bishop Richard J. Malone resigned after an investigation of his leadership by the Vatican. Revelations about his behind-the-scenes efforts to conceal sexual misconduct came to light after his two secretaries, Siobhan O’Connor and Fr. Ryszard Biernat, became whistleblowers and provided documents and audio recordings to 7 Eyewitness News.

On Feb. 4, interim bishop Edward B. Scharfenberger announced the closure of Christ the King Seminary, citing financial pressures.

There was growing pressure for Malone to resign since August 2018, when the 7 Eyewitness News I-Team revealed that Malone:

The pressure on Malone intensified in September of last year, when the I-Team published secret audio recordings where Malone attempted to conceal sexual misconduct allegations involving Rev. Jeffrey Nowak. Malone called the priest “dangerous” but allowed him to remain pastor of Our Lady Help of Christians for more than six months with no notification to parishioners.

The diocese is also under investigation by the FBI and the State Attorney General.