Diocese of Rochester, N.Y., files bankruptcy

GATES, N.Y. -- In the wake of nearly 50 lawsuits filed against it since New York's Child Victims Act took effect Aug. 14, the Diocese of Rochester filed for reorganization Sept. 12, under Chapter 11 of the U.S. Bankruptcy Code.

The petition was filed with the U.S. Bankruptcy Court Western District of New York. The court documents were signed by Rochester Bishop Salvatore R. Matano; Lisa Passero, diocesan chief financial officer; and Stephen Donato, a diocesan attorney.

"This is a very difficult and painful decision," Bishop Matano said in a video and letter to parishes released Sept. 12. The bishop read the letter at the beginning of a news conference held late that day at the diocesan pastoral center in Gates.

"But after assessing all reasonable possibilities to satisfy the claims, reorganization is considered the best and fairest course of action for the victims and for the well-being of the diocese, its parishes, agencies and institutions," he said. "We believe this is the only way we can provide just compensation for all who suffered the egregious sin of sexual abuse while ensuring the continued commitment of the diocese to the mission of Christ."

According to the United States Courts website, Chapter 11 is a voluntary action taken by organizations to settle claims on which they owe while remaining intact.

The petition states that the Rochester Diocese has between 200 and 999 creditors, estimated assets of $50 million to $100 million and estimated liabilities of $100 million to $500 million.

As part of its filing, the diocese submitted Form 204, listing creditors with the 20 largest unsecured claims. Nineteen of the 20 were anonymous creditors represented by attorneys; each such claim was labeled as a "CVA lawsuit" and estimated at a minimum of $100,000.

The Child Victims Act took effect Aug. 14, opening a one-year window during which child sexual abuse claims could be filed in cases that had previously been barred by a statute of limitations.

As of 5 p.m. Sept. 12, 46 claims had been filed against the Rochester Diocese since the state's Child Victims Act window opened.

"As a result, the diocese now faces a significant number of claims of sexual abuse of a minor, all dating back decades," Bishop Matano said in the video, noting that the diocese has not received a contemporaneous report of sexual abuse of a minor since 2006. "Litigation cost and settlements or jury awards will exceed our resources, and the diocese will be unable to litigate or settle these claims."

The bishop went on to explain that "a Chapter 11 filing stops the collection of debts and legal actions and enables the diocese to form a reorganization plan that will detail how available assets will be used to settle claims and negotiate reasonable settlements."

"Had the diocese not filed under Chapter 11," he continued, "it would face multiple civil actions, a slow, unpredictable and costly process that would require years of court involvement, and those claimants who filed suits first would receive all available funds to pay victims. As a result, later claimants would receive nothing. Most importantly, such lengthy proceedings delay justice for the victims and only prolong their pain and suffering."

As part of the reorganization plan, which must be approved by the bankruptcy court, the diocese intends to create a victims' fund, with a pool of money from the diocese and its insurance carriers. Bishop Matano emphasized that the Chapter 11 proceedings are not expected to directly impact the 86 parishes in the Rochester Diocese's 12 counties, explaining that parishes are separately incorporated under the state's Religious Corporation Law.

He further noted that such affiliated agencies as Catholic Charities are similarly protected through their separate incorporation under the state's Not for Profit Corporation Law. Among other separately incorporated affiliated agencies are the Catholic Courier, the diocesan newspaper, St. Bernard's School of Theology and Ministry and Providence Housing Development Corp.

During the news conference, Bishop Matano noted that the size of monetary awards for victims will be determined by the bankruptcy court. Although he did not give a timetable on how long the bankruptcy proceedings will last, he said in his letter that "the diocese's goal is to bring the Chapter 11 process to a conclusion as soon as is possible."

Toward the end of the news conference, Bishop Matano grew emotional as he praised the people of the Rochester Diocese for remaining supportive during this rocky chapter of diocesan history.

"It's very easy to have faith in the best of times. It's so difficult to have faith in times as challenging as these," he said.

(Latona is a staff writer at the Catholic Courier, newspaper of the Diocese of Rochester)