How would bankruptcy impact Diocese of Buffalo?

Lawsuits filed would be consolidated; Hear more on process

Mike Baggerman
December 10, 2019 - 3:00 am

Diocese of Buffalo with two dozen protesters calling for Bishop Malone's resignation. September 10, 2018 (WBEN Photo/Mike Baggerman)

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BUFFALO, N.Y. (WBEN) - If and when the Diocese of Buffalo files for bankruptcy, don't expect the church to quickly come out of the financial situation quickly.

Multiple bankruptcy attorneys have said that it could take years for the church to come out of bankruptcy if it indeed plans to file for the protection. Settlements paid over decades of child sex abuse within the church and lawsuits associated with the Child Victim's Act have both contributed to the fiscal woes of the church.

"It's my understanding that similar to the Rochester Diocese, you'd be looking at a Chapter 11 (bankruptcy)," Chris Grover, an attorney from Jeffrey Freedman PLLC, told WBEN. "That's the re-organization of a business rather than a full liquidation. The bankruptcy petition basically outlines the company - in this case the diocese's - assets, their liabilities, judgements, and those type of things."

It is believed that Albany Bishop Edward Scharfenger, who was appointed apostolic administrator of the Buffalo Diocese last week, will file bankruptcy for the Buffalo Diocese. The bankruptcy's role would be to create a situation where the church can continue to operate and stay afloat through the financial hardships caused by the more than 200 lawsuits that have been filed since August as part of the Child Victim's Act.

When the Diocese in Rochester filed for bankruptcy in September, it did not affect any parishes because they are incorporate as separate entities and were not part of the bankruptcy filing. The bankruptcy also allowed the church in Rochester to halt lawsuits from moving forward.

"Everything is going to have to be approved - Settlements, negotiations, all of those things - by a bankruptcy judge," Grover said.

During Saturday's symposium with the Movement to Restore Trust, Todd Brown from the University at Buffalo's School of Law said that it could take a couple of years for Buffalo to come out of bankruptcy.

"For the cases that have already been filed, they would be stayed under Chapter 11," Brown said. "They would be suspended in the court...new cases would not be filed. Instead, all of those cases would be consolidated for resolution in bankruptcy court."

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