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Bishop: Bankruptcy filing will let diocese continue its core mission

As he looked around the courtroom, Bishop Edward B. Scharfenberger described the occasion as "momentous."

Hours earlier, the Buffalo Diocese, the target of hundreds of clergy sexual abuse lawsuits, had become the 25th Catholic organization in the country to seek bankruptcy protection.

The filing, lawyers for the church said, is designed to ensure that people who suffered abuse receive adequate compensation, and that the diocese can continue its core mission for years to come.

"We're going to be OK," Scharfenberger said as he entered the federal courthouse downtown. "We're trying to do the right thing."

During the hearing that followed, it became clear to the lawyers and judge at the center of the bankruptcy that this one was both unusual and complex.

"This is a different kind of case," said Stephen A. Donato, a lawyer for the diocese.

What makes it different are the creditors, almost all of them plaintiffs who have sued the diocese over sexual abuse allegations.

Donato said there are 258 creditors who are plaintiffs in civil lawsuits against the diocese, but he expects that number to increase to 400.

[Related: How much are priests paid and more from diocese bankruptcy filing]

Over and over again, he found himself returning to the victims while making requests to the court.

He noted, for example, that most of those plaintiffs sought anonymity in their lawsuits and, without proper protection, could be identified in bankruptcy court proceedings. To avoid that, he asked for permission to submit those creditors' names under court-ordered seal.

"We are trying to err on the side of caution," he said Friday. "We want to make sure we do not impact on that confidentiality request."

Under questioning by U.S. Bankruptcy Judge Carl L. Bucki, Donato also found himself explaining why the diocese wants to continue its payments to retired priests and whether any clergy accused in sexual abuse cases would benefit from those payments.

"You intend to exclude those," Bucki asked.

"That's correct," Donato answered.

[Related: Clergy abuse survivors 'angry, frustrated' by diocese's bankruptcy filing]

Sitting in the courtroom Friday was Steve Boyd, a lawyer for more than 213 plaintiffs.

Boyd said the bankruptcy proceeding should insure that all victims get a chance to be heard and that the more serious cases of abuse result in the more substantive settlements.

The downside, he said, is that the case will allow the diocese to avoid the discovery stage of their civil lawsuits and therefore prevent his clients from learning what really happened.

"Getting to the bottom of it," Boyd said. 'They're preventing us from excavating the real truth."

Before the hearing, the diocese filed a number of "first-day" motions seeking permission to pay employees, taxes and otherwise continue the day-to-day operations of the diocese while the bankruptcy case unfolds.

Donato also made it clear the filing does not affect the diocese's numerous parishes.

"There is not a filing from any of the 161 parishes," Donato said. "None of those entities have filed Chapter 11."

The diocese will return to court March 26.

RELATED:

Buffalo bishop on bankruptcy: "We're trying to do the right thing"

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Buffalo Diocese bankruptcy: Read the documents

The Editorial Board: Bankruptcy may help the church's victims. Honesty will help more.

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