Long Island Catholic Diocese Bankrupted by Abuse Suits

(Bloomberg) -- One of the largest U.S. dioceses in the Roman Catholic Church filed for bankruptcy after its finances were devastated by sexual abuse lawsuits and the Covid-19 pandemic.

Since New York State passed a law that increased the statute of limitations on claims of sexual abuse, the Roman Catholic Diocese of Rockville Centre on Long Island has been served with 223 sexual abuse lawsuits, according to court papers from the diocese's late Wednesday filing.

“Chapter 11 was the only way to provide fair settlements to survivors while continuing to be of service to the 1.4 million Catholics in the geographical boundaries of the Diocese of Rockville Centre,” Bishop John O. Barres said in a news release. The filing is also necessary to manage disputes with the diocese's insurers over abuse coverage and reimbursements, according to the release.

The Covid-19 pandemic also put pressure on the diocese's finances, forcing closures or reduced operations of its parishes and sharply shrinking weekly collections. Donations in April, which included Holy Week and Easter Sunday, were down 60% compared with the average from the prior 10 months, according to court papers.

Asset Arguments

The diocese's number of Catholics is roughly half of Long Island's total population, according to a declaration. It's the eighth largest in the U.S. measured by the number of baptized Catholics.

A total of 24 Catholic dioceses and religious orders have filed for bankruptcy to address sex abuse claims since 2004, according to BishopAccountability.org.

Read more: Catholic Church shields $2 billion in assets from abuse payouts

The diocese reported assets and liabilities each in the $100 million to $500 million range. Other bankruptcies tied to the Catholic Church have faced heated arguments over asset totals, with some dioceses arguing they don't own parish and foundation funds while lawyers for abuse victims say those funds should be part of the bankruptcy estate available for victim settlements.

“There will be conflict, as there always is, as to the amount of assets the diocese has,” attorney Mitchell Garabedian, who represents 23 clergy abuse victims who have filed claims against Rockville Centre, said in an interview Thursday.

“It will probably be necessary to litigate against the diocese in the bankruptcy court to determine what assets the diocese has and where those assets are located,” said Garabedian, who played a pivotal role in clergy abuse cases in Boston and was portrayed by Stanley Tucci in the movie Spotlight.

The case is The Roman Catholic Diocese of Rockville Centre, 20-12345, in the Southern District of New York in Manhattan. To view the docket in Bloomberg Law, click here.

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