With its filing in U.S. Bankruptcy Court, the western New York diocese became the second in the state to file for Chapter 11 reorganization, and one of more than 20 dioceses to seek bankruptcy protection nationwide. Most recently, the Roman Catholic Diocese of Harrisburg, Pennsylvania, filed Feb. 19.
The Buffalo diocese has faced particular turmoil in recent months, culminating in the Dec. 4 resignation of Bishop Richard Malone following a Vatican-mandated investigation. Malone had faced intense pressure from members of his staff, clergy and the public to step down amid criticism that he withheld the names of dozens of credibly accused priests and mishandled reports of misconduct against others.
Albany Bishop Edward Scharfenberger called the bankruptcy filing “a path forward to healing.” “My hope is that, going forward, regardless of the mistakes we have made, regardless of the suspicions that may rightfully have been raised about the way things were done, going forward, we're going to see a lot of action that will result in very fair resolutions as much as we can,” Scharfenberger, who is temporarily overseeing the Buffalo diocese, said at a news conference.
Scharfenberger said the process, expected to take more than a year, will enable the highest possible number of victims to be compensated while allowing the work of the diocese to continue. The diocese includes 163 parishes and missions across eight western New York counties.
The Chapter 11 filing estimates between $10 million and $50 million in assets and between $50 million and $100 million in liabilities. The number of creditors is estimated at between 200 and 999. The diocese already has paid out about $18 million — including $1.5 million from the sale of the bishop’s mansion — to more than 100 victims under an independent compensation program established in 2018. It faces more than 250 new lawsuits filed since August, when the New York’s Child Victims Act suspended the statute of limitations to give victims of childhood abuse one year to pursue even decades-old allegations. The number of suits is expected to grow to more than 400, financial director Charles Mendolera said in a court filing.
The diocese reported a $5 million loss in 2019. The bankruptcy filing does not include individual parishes or Catholic elementary and high schools, which are separately incorporated, Scharfenberger said.
Attorney Jeff Anderson, who represents some of the alleged victims, criticized the filing as a way to “conceal the truth about predator priests in this diocese.” He and other critics of the process say the proceedings can limit victims’ access to sensitive records with the potential to expose additional wrongdoing by priests or senior church officials. The bankruptcy filing halts the discovery process in lawsuits filed in state court and transfers the proceedings to a federal judge.
“Those secrets should come out and the men who allowed abuse to continue should be held responsible,” the Survivors Network of those Abused by Priests, or SNAP, said. “Without full knowledge of what went wrong in these cases, we cannot hope to prevent them again in the future.”
The bankruptcy judge will set a deadline for individuals to file claims as the diocese begins to restructure its assets and finances. “Abuse survivors need to understand the diocese has assets and insurance,” said attorney Michael Pfau, who has represented numerous alleged victims in bankruptcy proceedings in several states. “A bankruptcy is simply a way to give the diocese a legal ‘time out’ from the current litigation so that one judge can ultimately decide a fair way to compensate all people who timely file a claim in the bankruptcy.”
Attorney James Marsh said the proceedings "should not and will not prevent survivors from seeking justice and accountability in Buffalo.” The Roman Catholic Diocese of Rochester was the first of the state’s eight dioceses to seek bankruptcy protection when it filed in September. Several others have said bankruptcy was a consideration.
SNAP urged New York Gov. Andrew Cuomo to intervene in church bankruptcies “in any way that he can.” More than a dozen attorneys general around the country, including in New York, have confirmed investigations or reviews of clergy abuse in the wake of a shocking Pennsylvania grand jury report last year. The report asserted that about 300 priests had abused at least 1,000 children in the state over seven decades.