CV NEWS FEED // Creditors are set to vote next month on whether they approve the $200 million settlement plan proposed by the Diocese of Rockville Centre, New York, which filed for Chapter 11 bankruptcy following approximately 600 claims of child sexual abuse.
The diocese’ settlement offer of $200 million is the largest settlement offer made in United States diocesan bankruptcy history. A Committee of Unsecured Creditors filed the claims against the diocese.
At a February 15 hearing, Judge Martin Glenn of the United States Bankruptcy Court for the Southern District of New York approved the diocese’s settlement plan.
Seventy-five percent of the creditors must vote in approval of the plan in order for the diocese to move forward. According to recent reports, Glenn is not optimistic that the plan will receive the necessary approval votes.
The news outlet LI Herald reported that, according to diocesan representatives, if less than 75% of the creditors vote in approval of the plan, “the court will dismiss the Chapter 11 case, forcing roughly 40 percent of the cases back to state courts.” The deadline for the creditors to vote is March 22.
In November, the Rockville Centre diocese issued a press release stating: “The proposed payout represents the largest settlement offer ever made in a diocesan bankruptcy in the country, both on a total payout and per claimant basis.”
The diocese maintains that the proposed plan will aid survivors in obtaining settlements without each of them having to undergo a lengthier trial-court process that would determine the settlements on a case-by-case basis.
“Under the Plan, survivors will have the opportunity to choose immediate compensation for all survivors,” the November press release continued:
A vote to reject the Plan in sufficient numbers may lead to dismissal of the Chapter 11 case, and force survivors to move their claims back to State Court, where they will once again be in a first-come, first-served litigation dynamic in the trial-court system.
…Survivors deserve a settlement now. The Diocese hopes that all parties, including survivors and their legal advisors, will vote in favor of the equitable and unprecedented offer in the Plan.
The diocese filed for bankruptcy in 2020, after hundreds of lawsuits were filed against it following the approval of the New York Child Victims Act. According to the Herald, in January of 2023 the creditors’ committee proposed a settlement plan of $450 million.
The diocese counter-offered with the $200 million, “with contributions to be made by the diocese, its parishes, co-insured parties and other members of the ministry, not including insurance payouts,” the Herald noted.
James Stang, an attorney representing the creditors’ committee, told the Herald that the counter-offer remains unsatisfactory and that next week, creditors will receive a letter from the committee recommending that they vote “no.”
The Herald added that the letter “includes a list of non-monetary concessions to improve abuse protections and promote healing for survivors who are not part of the Chapter 11 plan.”
The November statement from the diocese emphasized that “[c]ontinuing to prolong the case, or dismissing the case, will ensure that payments to survivors only go down from the current settlement offer contained in the Plan.”
“The Diocese has already made it clear that it is at the end of its resources,” the diocese stated:
As the survivors and their attorneys weigh the Diocese’s settlement offer, it is also important to remember the many families on Long Island that depend on the Diocese, parishes, and Catholic ministries to deliver compassionate health care, housing, education, food security, substance abuse, mental health and grief counseling, immigration services, religious and spiritual care.
Survivors deserve compensation now, and the Diocese’s charitable mission is more important than ever in these uncertain times. Both face a vulnerable and uncertain future if the Plan is rejected.