The Diocese of Syracuse, in the state of New York, has formally closed its bankruptcy process after establishing a fund of more than 176 million dollars to compensate victims of sexual abuse, an outcome that confirms the enormous economic impact of this crisis on the local Church.
As reported by OSV News, Bishop Douglas J. Lucia informed the faithful on February 25 that Judge Wendy Kinsella, of the United States Bankruptcy Court for the Northern District of New York, approved on the same day the final decree that ends a nearly six-year procedure under Chapter 11 (which allows an entity—company, institution, or diocese—to declare bankruptcy to reorganize its debts without immediately closing its activities).
A fund of more than 176 million for settlements and compensations
The approved plan establishes a trust fund for victims with more than 176 million dollars. Of that amount, 76.1 million come from insurance and 100 million have been contributed by what the bishop called the “Catholic family”: 45 million from parishes, 50 million contributed by the diocese itself through a combination of investments and loans, and another 5 million from diocesan entities.
The payments will be assigned by an independent arbitrator, as indicated by the bishop, in a system designed to concentrate the claims in a single compensation mechanism.
411 claims following the legal “windows” in New York
The diocese faced 411 unique claims filed under the protection of two state laws that reopened the possibility of reporting old abuses regardless of the previous statute of limitations: the Child Victims Act and the Adult Survivors Act.
Both laws opened temporary “windows” to file complaints: until April 15, 2021, in the case of the first, and until January 17, 2023, in the case of the second. The volume of claims, added to the legal structure of the litigations, pushed the diocese to resort to Chapter 11.
A legal mechanism to channel present and future claims
The agreement includes a “channeling injunction”, a figure of American bankruptcy law that channels claims toward a common fund, with the objective of avoiding individual lawsuits against the diocese, parishes, and other Catholic entities, and to also foresee possible future claims.
The diocese presents this scheme as an “integral” response that seeks a single channel for reparation, although the economic cost falls largely on diocesan and parochial structures.
Bishop’s apologies and call for prevention
In his letter, Bishop Lucia stated that the process has been longer than expected and acknowledged the burden it has placed on victims and the faithful. He said he has personally listened to survivors and reiterated a request for forgiveness “for any past negligence” in handling these cases.
He also assured that the plan formalizes commitments to “Safe Environment” policies to prevent the repetition of abuses and called for a special Mass on April 26 as part of the national month of child abuse prevention in the United States.
The closure of the bankruptcy ends the judicial process, but leaves the diocese marked by a financial burden that directly affects its structure and, especially, the parishes that have had to contribute to the fund.