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Facing 250 sex abuse lawsuits, Diocese of Buffalo declares bankruptcy

Second diocese in New York to file
Buffalo Diocese files for Chapter 11 Bankruptcy protection
Posted at 7:34 AM, Feb 28, 2020
and last updated 2020-02-28 19:12:34-05

BUFFALO, N.Y. (WKBW) — The Catholic Diocese of Buffalo, which is facing nearly 250 lawsuits involving clergy sexual abuse, has declared bankruptcy.

Aside from the obvious financial implications, the diocese's formal Chapter 11 bankruptcy filing means that many of the victims of clergy sexual abuse may not anytime soon get the answers that have long been hidden in secret diocesan archives regarding pedophile priests.

But there is still a chance that those hidden files could be forced as part of a bankruptcy settlement, as has happened in other dioceses.

Because the cases will soon be shifted from state civil court to U.S. Bankruptcy Court, survivors of clergy sexual abuse are likely to receive compensation, though it is unclear how much per case the diocese would be required to pay out.

According to bankruptcy documents, filed in federal court, the Buffalo Diocese is facing between $50 million and $100 million in estimated liability.

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Apostolic Administrator Bishop Edward Scharfenberger appeared at a news briefing Friday.

Apostolic Administrator Bishop Edward Scharfenberger appeared in U.S. Bankruptcy Court in Buffalo Friday morning just hours after filing for Chapter 11 protection for the Diocese of Buffalo.

Scharfenberger later appeared at a news conference at the diocese with attorneys.

"I'm careful not to use the word bankruptcy, even though we are in a bankruptcy court, because a lot of people are under the impression that the diocese is running out of money - we can't meet our obligations to our employees - which is not true," Scharfenberger told reporters.

According to the court filing the diocese owes $3.5 million to a list of 20 top creditors. M&T Bank tops the list at $1.6 million, but the other 19 are victims who filed child sexual abuse lawsuits against the diocese. But there are actually more tahn 250 cases filed against the diocese.

U.S. Bankruptcy Court Judge Carl Bucki held what he called an "emergency hearing" hours after the filing.

Bucki called the bankruptcy an "extraordinary process".

The judge asked if priests with substantiated allegations against them are being paid by the diocese.

7 Eyewitness Nee asked that question at the news conference with attorney Steve Donato responding.

"To the extent that there is a claim owned to a clergy on substantiated abuse list, which is on the website, to the extend that there were any funds owed to them as of today due prior to the filing — those will not be paid," replied Donato.

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Apostolic Administrator Bishop Edward Scharfenberger with attorneys.

Bishop Scharfenberger says Catholic schools and parishes are not part of bankruptcy filing.

"The health of the diocese is in the health of it's parishes and the same with catholic charities and other affiliated agencies - they are not involved in this," responded Scharfenberger.

The bishop says no parish donations will be touched and remain separate from bankruptcy.

"But not for the purposes of doing settlements — in other words - no money comes out of collections in order to resolve claims," Scharfenberger remarked.

The bishop says the filing is "not a stunt" to deflect from the lawsuits filed against the church.

The next bankrupcty court hearing is schedueld for March 26th at 10 a.m.

The bankruptcy means the church could be forced to sell properties and to make appeals for more money from parishioners, but it also paves the way for the Catholic Church in Western New York to -- after its debts are paid off -- emerge from the crisis with its mission and services still intact.

The dramatic move comes after the Diocese of Rochester became the first Roman Catholic diocese in New York State to file for bankruptcy on Sept. 12.

It is no doubt one result of the Child Victims Act, which was passed in January 2019 and allows victims of child sexual abuse in all institutions -- not only the Catholic Church -- a one-year "window" period in which they can sue the institutions to prove they were responsible for the abuse.

To date, more than 300 Child Victims Act lawsuits have been filed in Western New York.

At least 250 lawsuits allege abuse by clergy or employees in the Diocese of Buffalo, making the diocese the most-sued entity in all of New York State under the new law.

In December, Bishop Richard J. Malone resigned after an investigation of his leadership by the Vatican. Revelations about his behind-the-scenes efforts to conceal sexual misconduct came to light after his two secretaries, Siobhan O'Connor and Fr. Ryszard Biernat, became whistleblowers and provided documents and audio recordings to 7 Eyewitness News.

On Feb. 4, interim bishop Edward B. Scharfenberger announced the closure of Christ the King Seminary, citing financial pressures.

There was growing pressure for Malone to resign since August 2018, when the 7 Eyewitness News I-Team revealed that Malone:

The pressure on Malone intensified in September of last year, when the I-Team published secret audio recordings where Malone attempted to conceal sexual misconduct allegations involving Rev. Jeffrey Nowak. Malone called the priest "dangerous" but allowed him to remain pastor of Our Lady Help of Christians for more than six months with no notification to parishioners.

The diocese is also under investigation by the FBI and the State Attorney General.