Long Island diocese's exit from bankruptcy may signal future path for Buffalo Diocese

Feb 1, 2025

Buffalo News

Richard Tollner knows firsthand what the people who have sex abuse claims against the Buffalo Catholic Diocese are going through as the diocese’s Chapter 11 bankruptcy case plods unresolved toward its fifth year.

Tollner filed a Child Victims Act lawsuit in 2019 accusing the Rev. Alan Placa of sexually assaulting him in 1975 when he was a 16-year-old student at St. Pius X Preparatory Seminary in Uniondale, which is part of the Town of Hempstead, Long Island. After the Diocese of Rockville filed for Chapter 11 bankruptcy protection in 2020, Tollner was appointed chairman of the Official Committee of Unsecured Creditors, helping represent more than 600 people with sex abuse claims against priests and other employees of that diocese.

Tollner said he couldn’t discuss the committee’s deliberations, but he believes one of the lynchpins to the Long Island diocese’s recent exit from bankruptcy was the threat of some abuse lawsuits reaching a trial in state court.

“The key part is exposure,” he said. “They fear exposure.”

The trials never happened. Instead, the diocese agreed in the fall to a $323 million settlement with sex abuse claimants, a plan that was confirmed by a federal bankruptcy judge Dec. 4.

Rockville Centre became the first diocese in New York with a confirmed reorganization plan, providing a potential blueprint for dioceses in Buffalo, Rochester, Ogdensburg and Albany.

Six Catholic dioceses in New York declared bankruptcy

It also was the first diocese case in the country to be confirmed since the Supreme Court in June blocked a path dioceses had used in previous bankruptcy cases to protect non-bankrupt parishes from lawsuits.

The nation’s highest court ruled in a case involving opioid maker Purdue Pharma that non-debtors in a bankruptcy proceeding cannot receive liability releases without the consent of all creditors, a decision that threw a wrench into current diocese bankruptcies.

A ‘prepackaged’ result

As a way around the Purdue Pharma ruling, all 136 parishes in the Rockville Centre diocese filed their own bankruptcies and agreed to contribute funds into a trust for abuse victims.

The individual parish bankruptcy filings – agreed to by the creditors’ committee and conducted in a rapid “prepackaged” form allowed under U.S. Bankruptcy Court for the Southern District of New York guidelines – made parishes additional debtors in the diocese case. As debtors, they could be released from the sex abuse claims, including any pending CVA lawsuits and potential future claims, if the state opened a second window suspending the statute of limitations in civil cases claiming childhood sex abuse.

With liability releases in bankruptcy, both the diocese and the parishes were able to sell their insurance policies back to multiple insurers for $85 million in cash that went toward the settlement trust for sex abuse claimants.

“The fact that Rockville Centre ended in a confirmed plan, given how acrimonious that case got, is encouraging,” bankruptcy expert Marie T. Reilly said. “It suggests to me, at the end of the day, making a deal, a global deal in a Chapter 11 case, makes so much more sense for the survivors, for claimants, than endless additional years of litigation with a very uncertain end.”
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