Bankruptcy, a Trust Fund and the Insurers: A Catholic Diocese Agrees to Pay US$55 Million to Abuse Survivors

• The Diocese of Rochester agreed to pay US$55 million to survivors of clergy sexual abuse
• It filed for bankruptcy in 2019 after hundreds of lawsuits under New York’s Child Victims Act
• The money will go into a trust fund, and survivors may also pursue claims against the diocese’s insurers
• The deal needed bankruptcy court approval and could let the diocese exit bankruptcy in 2023

The Roman Catholic Diocese of Rochester in New York agreed to pay US$55 million to survivors of sexual abuse by clergy, the Associated Press reported in a story carried by the Jamaica Observer.

The diocese filed for bankruptcy in 2019 after hundreds of lawsuits were brought under New York’s Child Victims Act. Under the agreement, which was reached in negotiations with survivors, it will set up a trust fund for them. Bishop Salvatore Matano said survivors may also pursue further claims with the diocese’s insurance carriers. The settlement needed the approval of the bankruptcy court before it became final, and church officials said it could allow the diocese to leave bankruptcy protection in 2023.

In a “Letter to the Faithful”, Matano wrote: “The history of sexual abuse of children in our Church has caused tremendous pain, hardship, alienation, and understandable anger.” Attorney Jeffrey Anderson, who represents 175 claimants, called the agreement “a historic day with a historic deal”. Mitchell Garabedian, who represents 96 claimants, said it allowed many victims “to deservedly obtain validation, self-worth and a sense of accomplishment”.

More than 9,000 survivors filed lawsuits against clergy, educators, Boy Scout leaders and others after New York passed the Child Victims Act, which extended the statute of limitations for such cases and temporarily removed time limits for civil claims. The original filing deadline of August 14, 2020 was extended to August 14, 2021 because of pandemic court disruptions.

The first concern here is justice for survivors. The case also shows how a church’s liabilities reach its balance sheet. Bankruptcy, trust funds and insurance recoveries are the tools used to pay settlements, and dioceses facing large claims often have to look at the value of their property as well. For Jamaican denominations and church trustees, there are practical lessons: strong safeguarding, proper liability insurance whose terms are understood, and governance that treats a church’s buildings and land as assets held in trust. Failures in any of these can end up costing a church its property.

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