A Roman Catholic diocese in Long Island, New York, announced a new bankruptcy settlement on Thursday that would pay more than $323m to about 530 sex abuse survivors who alleged they were abused by priests when they were children.
The diocese of Rockville Centre, which serves about 1.2 million Catholics in Nassau and Suffolk counties, said earlier this year that it did not think a bankruptcy settlement would be possible after abuse survivors rejected the diocese’s previous $200m settlement offer.
US bankruptcy judge Martin Glenn in Manhattan, who is overseeing the case, said the deal represented “enormous progress” after the bankruptcy came “within a hair’s breadth” of failure.
Rockville Centre will contribute $234.8m to a settlement fund, with four insurers contributing $85.3m. The settlement will also receive funding from another insurer that is being liquidated in a separate insolvency proceeding and from attorneys representing abuse survivors.
Diocese spokesperson Eric Fasano said the settlement would ensure “the equitable compensation of survivors of abuse while allowing the church to continue her essential mission”.
A mediating attorney who worked on the settlement agreement, Adam Slater, added in a statement to the Guardian: “Importantly, this is the largest Diocese settlement in the history of New York State, and also the largest Catholic bankruptcy settlement ever.”
The diocese filed for chapter 11 bankruptcy in New York in October 2020, citing the cost of lawsuits filed by childhood victims of clergy sexual abuse.
More than two dozen Catholic dioceses have filed for bankruptcy in recent years, after New York and other states enacted laws that temporarily enabled victims of child sexual abuse to file lawsuits over decades-old crimes.
Thursday’s settlement could provide a new path forward for dozens of Catholic dioceses that have filed for bankruptcy to address sex abuse claims.
For instance, the archdiocese of New Orleans recently proposed that it and its affiliates settle the bankruptcy it filed in May 2020 for just $62.5m, with its insurers contributing nothing. About 500 abuse claimants in that case have counter-proposed that the church and its affiliates settle for about $217m, with insurers then contributing roughly another $800m.
Dioceses had previously relied on bankruptcy courts’ ability to grant sweeping legal protections to non-bankrupt entities that contributed to settlement funds, a practice that the US supreme court shot down this year.
That ruling, in the bankruptcy of OxyContin maker Purdue Pharma, forced the bankrupt dioceses to come up with new ways to incentivize settlement contributions from insurers and parishes, which in previous Catholic bankruptcies had contributed funds to dioceses’ settlement plans to end their exposure to sex abuse lawsuits.
Rockville Centre solved that problem by first agreeing to have all of its parishes file for bankruptcy, where they could gain legal protections in exchange for subjecting their assets and liabilities to court oversight, the diocese’s attorney Corinne Ball said in court. The insurers then agreed to buy back their policies from the diocese and parishes, which ends their responsibility for covering the sex abuse claims.
Guardian staff contributed reporting
