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Albany’s Roman Catholic Diocese has filed for Chapter 11 bankruptcy due to the financial fallout from hundreds of child sexual abuse lawsuits it faces.
Bishop Edward Scharfenberger announced the bankruptcy move on Wednesday, stating that the church had no other option since a global settlement with all plaintiffs was unlikely, and the church’s self-insurance funds had been depleted after settlements were paid out in dozens of individual cases.
The bankruptcy move comes after months of negotiations between the church and plaintiffs, whose cases allege the diocese allowed the abuse to occur and then covered it up.
The Albany Diocese is the fifth of eight in New York State to declare bankruptcy following a flood of cases filed between 2019 and 2021 during the Child Victims Act window allowing survivors to sue regardless of whether the claims were outside of the statute of limitations.
However, some of the abuse victims said previous global settlement offers by the diocese were insufficient, and claimed the church continued to block efforts to get information in their cases.
Scharfenberger said that a global settlement with all plaintiffs would have allowed for the most fair outcome, and said bankruptcy would ensure all plaintiffs with open cases would receive compensation. The bankruptcy case will pause pending lawsuits so the diocese can reorganize and determine the value of its assets.
Lawyers representing 190 of the victims in cases against the Albany Diocese have accused the church of understating their assets and filing for Chapter 11 bankruptcy as a legal tactic.
The lawyers believe the diocese is worth $600 million, while in the bankruptcy case it claims to only have assets worth between $10 and $50 million.
Victim lawyer Cynthia LaFave criticized the diocese, stating that their decision to file for bankruptcy is a “calculated self-effacement in a long history of cowardice” and an attempt to “silence and suppress the very people they purport to protect.”
»Catholic Diocese of Albany seeks bankruptcy protection amidst child sexual abuse claims«
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