By By Dietrich Knauth
NEW YORK (Reuters) – A Roman Catholic diocese in Long Island, New York announced a new bankruptcy settlement on Thursday that would pay more than $323 million to about 530 sex abuse survivors who alleged they were abused by priests when they were children.
The Roman Catholic 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 $200 million settlement offer.
U.S. 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 $234.8 million to a settlement fund, with four insurers contributing $85.3 million. 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 spokesman Rev. Eric Fasano said the settlement
would ensure “the equitable compensation of survivors of abuse while allowing the Church to continue her essential mission.”
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 diocese 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.
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 U.S. 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 (NYSE: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.