“It is very important for me to point out that the mission and ministries of the diocese and parishes will continue during the reorganization proceedings,” he said. He asked for prayers “for all involved, that God’s peace and healing can prevail.”
Scharfenberger said the diocese has been named in more than 400 lawsuits filed from August 2019 to August 2021 under the Child Victims Act of 2019. The act allowed a retrospective one-year “look back” window during which alleged abuse victims could file lawsuits long after the statute of limitations had ended. Then-Gov. Andrew Cuomo extended the window through 2021, citing the obstacles caused by the coronavirus pandemic.
The diocese has settled more than 50 of these lawsuits. Settlements have been “large” and the “limited funds” have been depleted, the bishop said.
Chapter 11 bankruptcy will ensure “some compensation” for all abuse victims with pending litigation. The collection of debts and legal actions against the diocese will halt and a reorganization plan will determine available assets and insurance carrier participation “to negotiate reasonable settlements” with abuse victims and other creditors.
There is no timeline for the Chapter 11 bankruptcy, the Albany Diocese said in a statement. Other reorganizations have continued for several years. Bankruptcy reorganization plans usually must be approved by the affected creditors, including lawsuit plaintiffs, and also by the bankruptcy court.
The bankruptcy announcement follows months of negotiations between attorneys for the diocese and for the plaintiffs. Several attorneys for plaintiffs complained that the diocese’s offer of a global settlement fell far short of a reasonable amount and alleged that the diocese’s attorneys had obstructed the legal discovery process, the Albany Times-Union reported.
