Now we know that Bishop Edward B. Scharfenberger is more than bankruptcy curious. The leader in charge of Buffalo’s Catholic diocese told a Buffalo News reporter on Monday that filing for Chapter 11 protection is probable as the diocese faces an onslaught of lawsuits from individuals making claims of clergy sex abuse.
As we have noted before, that would be unfortunate. If it happens – and there are defenses for it – the diocese needs to be as forthcoming about the abuses its priests and bishop committed as it would if the matter were left in state court. There can be no more hiding in dark corners.
While having claims against the diocese moved to bankruptcy court may ultimately result in a more equitable financial settlement for some of the victims than if their cases remain in civil court, it can still leave many feeling they are denied a full hearing.
Going through bankruptcy court tends to take longer, drawing out the process. And proceedings in that court focus on financial aspects of the case, denying victims a chance to record their stories of abuse in the public record and limiting their powers of legal discovery. By narrowing the focus to assets and liabilities, it also has the potential to let the diocese keep more embarrassing details from its past out of public view.
Catholic church finance expert Charles E. Zech told The News in 2019 that bankruptcy can result in more equitable compensation for abuse victims than trials in state court. Because state courts handle cases in the order in which they are filed, they may favor large verdicts or settlements in early cases.
Bankruptcy courts, according to Zech, will treat all the plaintiffs as a group and make sure that they get paid based on their degree of abuse.
It is not entirely clear what Scharfenberger meant when he said last week that leaders of other Catholic dioceses have told him that a Chapter 11 filing leads to “kind of a purification, a refocus” on their mission.
His words suggested a bit of spin at work, as he tried to accentuate the positive when discussing a controversial policy consideration.
Rochester in 2019 became the first diocese in New York State to file for Chapter 11. According to BishopAccountability.org, 20 other dioceses or religious orders in the United States have done the same.
Scharfenberger said he has had conversations about bankruptcy with Bishop Salvatore Matano of the Rochester Diocese, as well as with the Archdiocese of St. Paul and Minneapolis, which filed for bankruptcy in 2015 and three years later reached a settlement in which it agreed to pay $210 million to victims.
The Buffalo Diocese has been named as a defendant in more than 225 Child Victims Act cases – more than any other entity in the state. The act, signed into law in February 2019 after years of opposition from the Catholic Church, provides a one-year look-back period in which adult survivors of sexual abuse, up until their 55th birthday, can sue an abuser or a negligent institution.
Scharfenberger, who heads the Diocese of Albany, was appointed to oversee the Buffalo Diocese after Bishop Richard J. Malone announced his retirement in December. Malone was also considering whether the diocese should declare bankruptcy.
At his introductory news conference, Scharfenberger said the victims of sexual abuse “are our family. I want everyone to know that they will be treated with respect. … I’ll meet with any and all survivors.” He also made a commitment to transparency.
If financial considerations require him to file for bankruptcy, the bishop owes it to abuse victims to keep his promises. Treating them with respect means committing the diocese to transparency when it comes to credible accusations of abuse. The cliché about a family being as sick as its secrets applies. The time for cover-ups is long past.