Voting by more than 850 child sex abuse claimants continues until 5 p.m. Nov. 3 on whether to approve a nearly $327 million settlement plan with the diocese and its parishes.
Deals with insurance companies to foot about $177 million of the settlement tab recently received tentative approval from Chief Judge Carl L. Bucki, who is overseeing the case in U.S. Bankruptcy Court for the Western District of New York.
The deals are contingent upon a plan of reorganization being confirmed by the court.
And the first of what will be several phases of a confirmation hearing is set for Tuesday inside the Robert H. Jackson U.S. Courthouse.
The bankruptcy case began Feb. 28, 2020. Lawyers for the diocese, parishes, and the creditors committee have all expressed a desire to finish it by the end of this year, although given the number of complications and delays the case has faced over the past six years and eight months, it would be of little surprise if it continued into 2027.
Here are some additional questions and answers about the case.
Do all abuse claimants need to vote in favor of the plan for it to be confirmed by the judge?
No. The goal of lawyers for the diocese and the creditors committee is to get 100% of voting claimants to vote in favor of the plan of reorganization, which would be a powerful statement to the judge that the plan should be confirmed without further delay.
But the reality is that the Buffalo case has more claimants than any other diocese bankruptcy to date and getting them all on the same page is unlikely.
With a judge’s approval of disclosure statement, sex abuse claimants will soon get a chance to vote on $326 million settlement plan.
Under bankruptcy rules, abuse claimants are considered a class of unsecured creditors. The class is deemed to have accepted the plan if at least two-thirds of ballots returned are in favor of it. And even if the class rejects the plan, it could still proceed to confirmation through a process known as a cram down.
How much will each abuse claimant receive in the settlement?
The total number of people who filed abuse claims in the Buffalo Diocese bankruptcy is at least 850, although court papers recently filed indicate the number could be as high as 924. So, on average, that would amount to a range of $353,848 to $384,654 per abuse claimant.
But claimants won’t receive the same amounts. Some will get less than the average amount and some will receive more. Lawyers developed an “allocation protocol” that will guide how settlement funds get distributed.
An experienced mediator will serve as the reviewer of the abuse claims, first determining if there is “credible evidence” that a priest or other parish or diocese employed abused the claimant and then evaluating the severity and impact of the abuse. The mediator will determine an award amount based on a scoring system under the allocation protocol.
If an abuse claimant voted against the plan, is he or she excluded from the settlement?
No. A claimant who voted against the plan will still receive a settlement amount, if the plan gets confirmed and he or she signs a legal document releasing the diocese, parishes and insurers from any liability in connection with the abuse.
What is the status of parishioner appeals to the Vatican objecting to the amounts their parish boards of trustees have agreed to contribute to the settlement?
The Vatican’s Dicastery for Clergy has responded to some parishioner appeals regarding parish payments by issuing several decrees ordering the diocese to return any parish money that was transferred for the purposes of paying into a settlement.
But a lawyer for the parishes has said that no funds had been transferred out of a parish’s control, and proper Vatican approvals were still being sought.
By contributing to the settlement, parishes no longer will have to defend against child sex abuse lawsuits, said William Heuer, who is representing the parishes. Other dioceses also have relied on significant amounts of parish money to help fund settlements, so it doesn’t appear that the Vatican opposes this strategy for dealing with sex abuse liability.
In the Diocese of Rockville Centre, for example, 136 parishes were contributing $103.1 million in cash and other assets over five years, about a third of the $323 million settlement total.
The Archdiocese of San Francisco in June reached a settlement of $395 million to cover 530 sex abuse claims and asked parishes to pay $1 million to $5 million each toward covering the settlement.
“It’s not like Catholic dioceses have bank vaults full of cash behind the altar. They just don’t,” said Marie T. Reilly, an attorney and retired Penn State University law professor who studies Catholic bankruptcy cases. Dioceses in Chapter 11 for three or four years typically spend at least $20 to $30 million in fees to lawyers and other professionals, she added. “That’s all cash. That’s cash off the top that’s coming out of operating surplus,” said Reilly.
When are the parishes filing for bankruptcy protection as co-debtors in the diocese’s case?
It hasn’t happened yet, and an exact date has not been determined. However, a hearing is scheduled for Dec. 8, at which time lawyers are expected to request what is called an 1129 approval from Bucki confirming the reorganization plan.
Attorneys for the parishes could then immediately file petitions as part of a “rapid, pre-packaged” bankruptcy procedure. As part of the procedure, parishes would be able to emerge from Chapter 11 within 24 to 48 hours, with little to no disruption of their financial operations.
“We would come back (to the court) a few days later, however that works, still with the goal of getting this done during this calendar year,” said Stephen A. Donato, lead attorney for the diocese.
What are some remaining obstacles to a confirmed reorganization plan?
Not many, assuming claimants approve the plan through their ballots. The Office of the U.S. Trustee has filed an objection to confirmation. Assistant U.S. Trustee Joseph W. Allen argued in court papers that the plan would give liability releases to insurers without the consent of the individual abuse claimants, which he said isn’t allowed.
Allen’s objection also seeks more clarity in the plan regarding releases to non-debtor entities that are contributing to the settlement.
An abuse claimant also wrote to Bucki saying survivors "are getting screwed" and asking him not to confirm the plan. The abuse victim said a priest had raped him more than 100 times when he was a child and he was not getting justice under the current plan.
In previous court hearings, Bucki raised questions about the plan’s feasibility, because the diocese hasn’t spelled out in detail where it is getting $150 million to cover the non-insurance portion of the settlement.
The judge has indicated he wants a line-by-line accounting of the sources of the $150 million. If he’s not convinced all the money is there to make the plan work, Bucki could decline to confirm it.