Catholic diocese needs its churches to declare bankruptcy before creating $325M victims’ fund
The Catholic diocese in Buffalo has been entangled in bankruptcy proceedings since 2020, and it’s now requesting its member churches to declare bankruptcy to resolve its own case. A university law professor told Straight Arrow the move isn’t likely to close the churches but helps the larger diocese resolve sex abuse claims.
A new bankruptcy filing by all of the Buffalo Diocese’s 163 member parishes could help establish a $325 million victims’ trust fund to be separate from the diocese and its parishes, Pennsylvania State University law professor Marie Reilly told Straight Arrow. The proceeding is a legal maneuver to resolve the hundreds of claims filed against the church for mishandling church sex abuse cases. The payout is expected to benefit around 900 claimants, according to NBC News Buffalo affiliate WGRZ.
“Short answer is a worshiper who attends or is a member of any one of the parishes that will be affected by the bankruptcy, it will be completely invisible,” Reilly said.
The request is necessary after the U.S. Supreme Court ruled in the Harrington v. Purdue Pharma case that a Chapter 11 bankruptcy case cannot include a release of legal claims against third parties without the claimants’ consent.
Proceedings will move quickly to expedite the closure of the diocese’s Chapter 11 case, the diocese told EWTN News, formerly Catholic News Agency.
“What the Diocese of Buffalo is proposing has been done twice before,” Reilly said.
The Diocese of Rockville Center in New York and the Archdiocese of New Orleans took similar actions to resolve their cases by having their parishes, affiliates, cemeteries, high schools, foundations and related organizations file for bankruptcy.
None of the filings will proceed without approval from people who filed sex abuse lawsuits. Reilly added that the diocese’s insurance and the parishes’ insurance mostly recognize they are liable to issue monetary relief to the sex abuse lawsuits, but are only willing to do so if the diocese is released from all claims.
“I don’t want to say it’s a formality, but it’s a structural requirement in order to get the complete relief that the diocese and the parishes need,” she said.
Dioceses turn to bankruptcy for sex abuse claims
Buffalo isn’t the only Catholic organization involved in bankruptcy to help resolve claims and payments to sex abuse survivors. Reilly has counted 43 other Catholic groups that have filed since 2004, with 15 ongoing.
The filings have resulted in 31 settlement programs as of March 17, totaling more than $2.2 billion for at least 8,000 victims and the organization’s insurance companies.
Affording settlement programs caused several churches to close and parishes to be combined. The Diocese of Oakland has closed 13 churches this year, according to nonprofit news The Oaklandside. The Archdiocese of New Orleans closed 10% of its 111 parishes in 2024 due to the lawsuits, the largest since the post-Hurricane Katrina closure, which forced 40 parish mergers and 27 church closings, the National Catholic Register reported in 2023.
Reilly said sex abuse claims hit Catholic organizations more than other religions as the church typically holds rigorous insurance policies and have remained operational for decades.
Churches likely to remain open
Reilly added that while the bankruptcy case itself doesn’t mean the churches will cease operations, the diocese is still dealing with high operational costs at its churches.
“People in Buffalo — parishioners, Catholic faithfuls — are understandably frustrated because the diocese, at the same time it’s trying to manage this bankruptcy case, is restructuring the diocese and there are parishes that are on the brink of closure,” she said.
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