Diocese of Buffalo files for bankruptcy

Faced with over 250 lawsuits alleging clergy sex abuse, the Diocese of Buffalo has filed for Chapter 11 bankruptcy protection.

The Diocese said in a press release Friday, Feb. 28, that the filing would enable “resolution for the most number of individuals who have filed claims under the Child Victims Act.” Parishes, Catholic elementary and secondary schools, Catholic Charities of Buffalo and the diocese’s capital and endowment campaign - “Upon This Rock” - were not included in the filing. The Diocese added that filing will allow it to continue “its mission throughout Western New York, while working to settle claims with existing Diocesan assets and insurance coverages.” This is the second bankruptcy filing by a diocese in New York State; the Diocese of Rochester filed for bankruptcy protection on Sept. 12, 2019.

“We have no more urgent work than to bring about justice and healing for those harmed by the scourge of sexual abuse. The intense emotional, mental and spiritual pain inflicted on these innocent victim-survivors is a heavy burden they are forced to carry throughout their lives,” said Bishop Edward B. Scharfenberger, Apostolic Administrator of the Diocese of Buffalo. “Our decision to pursue Chapter 11 reorganization - arrived at after much prayer, discernment and consultation with the College of Consultors and our Diocesan Finance Council - is based on our belief that this approach will enable the most number of victim-survivors of past sexual abuse in achieving fairness and a sense of restorative justice for the harm they have experienced. It will also allow the vital, mission-driven work of faith that is so essential to the residents of Western New York to continue uninterrupted.”

The diocese said in court papers that it does not have enough assets to pay the millions of dollars being sought by creditors. The documents showed assets of $10 million to $50 million and liabilities of $50 million to $100 million. The diocese also said it had between 200 and 999 creditors. The diocese paid $17.5 million to 106 people claiming they were abused in 2018 under a voluntary compensation program. The Child Victims Act, which went into effect on Aug. 14, allows victims to seek action against their abusers until they are 55 and opened a one-year look-back window for people who were sexually abused to seek civil action against their alleged abusers. 

While there is no timetable on when Chapter 11 reorganization will be completed, the filing is a continuation of the reorganization of the troubled diocese under Bishop Scharfenberger since he was named apostolic administrator by Pope Francis on Dec. 4, 2019. On the same day, the pope accepted the resignation of Bishop Richard Malone, who faced questions for over a year about how he handled the growing clergy abuse crisis in the diocese.

On Jan. 30, the diocese listed a $5 million loss for fiscal year 2019 and Bishop Scharfenberger said the decision to file for bankruptcy and reorganize under Chapter 11 would be made soon. The diocese, which listed a loss of $1.8 million for the prior year, said the most recent losses were due to lower revenue and deduced assets.

"Total assets decreased $21.7 million primarily due to a $18 million reduction in investments attributable to the Independent Reconciliation and Compensation Program," a statement said, referring to a fund that compensates victims of clergy abuse.

On Feb. 2, the diocese, citing operating losses and declining enrollment, announced it would close Christ the King Seminary after the academic year after averaging losses of $500,000 a year for the last decade. The seminary has just 26 men enrolled this year; just 10 percent of its capacity. Bishop Scharfenberger said a committee will look at what might be done with the seminary's 132-acre campus in Aurora, 20 miles southeast of Buffalo, after the closing.

Then on Feb. 13, Paul Lubienecki, a former professor at the seminary was charged with cyberstalking after making harassing phone calls over a six-month period to Buffalo-area TV reporter Charlie Specht, who has covered the diocese’s sex abuse scandal since the beginning.

After Specht reported on the closing of the seminary, Lubienecki allegedly called Specht and threatened to kill him.

With Catholic News Service