Diocese of Rochester Bankruptcy: What It Means for Abuse Survivors

By Leander James

What happened?

On September 12, 2019, the Diocese of Rochester, NY, filed Chapter 11 bankruptcy. As a non-profit corporation, it had the choice to file bankruptcy to deal with mounting lawsuits brought by survivors of clergy sexual abuse or to fight them in state court. It chose to file bankruptcy.

What is Chapter 11 bankruptcy?

Chapter 11 is a form of bankruptcy that allows the corporation to continue to operate provided it pays its creditors with available assets. In a Catholic diocese bankruptcy, this means that the diocese can continue to function, but it must gather together all the money, insurance and other available assets it has to compensate clergy sexual abuse victims. In its filing, the Rochester Diocese disclosed it has at least $50 to $100 million in assets. Dioceses often understate their assets when they file bankruptcy, so in our view, the assets available to compensate abuse survivors will likely be much greater.

Does the Diocese of Rochester bankruptcy mean the Diocese has no money to pay abuse survivor claims?

Absolutely not. Just the opposite; the Diocese has money, insurance, and other assets to substantially compensate survivors. Sexual abuse survivors who may have a claim and who want justice should file their claim in the bankruptcy case. Claims timely filed in past bankruptcies have resulted in significant settlements, and there is every reason to believe the same will occur in this bankruptcy.

Who may file a claim?

Any person sexually abused as a child (under the age of 18) at any time within the Diocese of Rochester by a priest, deacon, nun, brother or diocesan layperson may have a claim. Any person sexually abused as a child outside the Diocese by anyone acting for the diocese, including a diocesan priest or deacon, may have a claim. Others may have viable claims. When in doubt, a survivor should consult a knowledgeable attorney to determine their potential rights.

Is a bankruptcy claim confidential?

In past Catholic bankruptcy cases, judges have ordered that the identity of abuse survivors who file claims must be kept confidential. There is every reason to believe the confidentiality of claimant identities will be maintained in this bankruptcy. Further, the bankruptcy case is typically more confidential than a state lawsuit.

Why file a claim?

For empowerment, healing, justice, and meaningful compensation. In our experience, bringing a child sexual abuse claim is empowering and helps the survivor to heal from the past. None of us can wash away bad things that happen to us as children, but we can heal and move on. Bringing a claim furthers that process. Another reason to bring a claim is “strength in numbers.” The more claimants who come forward, the greater the strength of the abuse survivors in bankruptcy to obtain monetary compensation and non-monetary terms for the protection of children.

What can abuse survivors accomplish through bankruptcy?

Survivors can and should expect to accomplish a great deal in bankruptcy. They will be represented by a Creditor Committee of abuse survivors who will direct the bankruptcy litigation and ultimately negotiate a settlement. Settlements in past bankruptcies have included not only tens of millions of dollars to compensate abuse survivors, but have importantly included non-monetary terms for the future protection of children and respect of abuse survivors. A good example of this type of settlement is the Northwest Jesuit bankruptcy, where the settlement provided for $161.1 million for abuse survivors and required the Jesuits to adhere to 23 non-monetary demands. You can learn more about that settlement here: https://www.spokesman.com/stories/2011/mar/26/jesuits-to-pay-victims-of-abuse/.

How do abuse survivors file their claims in the Bankruptcy?

Abuse survivors file their claims in the bankruptcy court by filing a “Proof of Claim” document. In most cases, the attorney will file this document for the survivor. The Proof of Claim should be filled out fully and correctly. It must be filed before the “Bar Date”—the deadline set by the court for the filing of proofs of claim. The proof of claim document in this case has not yet been created. One will be approved by the bankruptcy judge, then made available to abuse survivors (claimants). The bar date in this case has not yet been set. The judge will determine the bar date after notice to all parties who will have an opportunity to present their arguments to the judge regarding the appropriate date to use.

What is the attorney’s role in bankruptcy?

Attorneys who represent abuse survivors protect their client’s rights and shepherd their claim through the bankruptcy process. Representation includes working with the attorney for the creditor (survivor) committee to assure the diocese and its insurance companies amass all available money required under the law to compensate abuse survivors. Our representation additionally includes advocating for the respect of abuse survivors and non-monetary changes for the protection of children, because we have found over the years that our clients want to achieve these goals, and we strongly believe in them. What should I look for in an attorney to represent me? An abuse survivor should look for an attorney whom they trust and who has experience in Catholic bankruptcy cases. There are many types of attorneys out there, but very few have been through Catholic bankruptcies before. Knowledge of that process, in our view, is essential for effective representation.