As more allegations surface of childhood sexual abuse at the hands of Catholic priests across New York, more dioceses are turning to bankruptcy. The Diocese of Rockville Center in Long Island was the latest to file for reorganization under Chapter 11. Facing more than 200 lawsuits under the Child Victims Act, Rockville is the largest diocese in the U.S. to file bankruptcy. But it’s far from the first.
Over the last 15 years, more than two dozen dioceses nationwide have filed bankruptcy in response to sexual abuse lawsuits. In New York, four of the state’s eight dioceses have declared bankruptcy since the landmark Child Victims Act went into effect last year.
What legal impact does bankruptcy have on pending lawsuits?
Filing bankruptcy has a big impact on the pending Child Victims Act lawsuits. It essentially derails those cases, grinding them to a halt so the federal bankruptcy court can undertake the lengthy process of sorting out the diocese’s finances.
It also means that instead of litigating each case individually, the diocese will establish a compensation fund for survivors of abuse. The fund will address both pending and future claims.
The move to file bankruptcy limits a key aspect of the litigation process: discovery. Bankruptcy will shield the dioceses from the full discovery process in the Child Victims Act lawsuits. That means damaging documents and disclosures may not come to light. In essence, the dioceses are sidestepping a critical part of the litigation process: fostering accountability.
Will survivors still be heard?
A question mark remains as to whether litigation will continue against the individual Catholic schools and parishes which were also named in the lawsuits. Although they operate under the umbrella of the dioceses, they’re technically separate entities.
Nonetheless, in the Rockville Centre bankruptcy, the diocese asked the bankruptcy court to freeze the legal proceedings against those parties as well. If granted, the freeze would potentially deprive survivors of an opportunity to be heard – which was a foundation of the Child Victims Act.