Buffalo Diocese Declares Bankruptcy

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BUFFALO, N.Y. (ChurchMilitant.com) - The scandal-ridden diocese of Buffalo has filed for bankruptcy protection, thus enabling it to shelter not only financial assets but also many facts about abusive priests.

With cases from alleged victims of clerical sex abuse mounting and insurance companies vowing not to pay, on Friday, Buffalo joined more than 20 other dioceses by filing for bankruptcy protection. In a news conference announcing the filing, Bp. Edward Scharfenberger, apostolic administrator of the diocese, told reporters the move would result in fair resolutions:

My hope is that, going forward, regardless of the mistakes we have made, regardless of the suspicions that may rightfully have been raised about the way things were done, going forward, we're going to see a lot of action that will result in very fair resolutions as much as we can.

Critics, however, say bankruptcy protection not only shelters assets but also shields predator priests from public scrutiny.

The bankruptcy process is expected to take more than a year to conclude, according to Scharfenberger. The filing estimates the diocese has as little as $10 million in assets while and as much as $100 million in liabilities owed to as many as 999 creditors.

The bankruptcy was long in coming with insiders saying the diocese may have begun shielding tens of millions of dollars years ago in anticipation of this moment. A report by The Buffalo News shows the diocese started shifting assets shortly after lawmakers began attempts in 2005 at lowering the state's statute of limitations for cases of clerical sex abuse.

A bill seeking to open a window for sex abuse victims — similar to the Child Victims Act (CVA), which was signed into law in February 2019 — was first introduced by New York lawmakers in 2005. The following year, Buffalo began shifting $91 million from its pooled investment program to various accounts under the care of parishes, schools, cemeteries and other Catholic entities.

These individual groups, in turn, deposited the money into a professionally managed fund called the St. Joseph Investment Fund. The diocese then downgraded its assets from $145 million in 2006 to $54 million in 2007.

In bankruptcy court, investigators will scrutinize these shifts to see if they were made in anticipation of the coming bankruptcy and in order to deliberately place tens of millions of dollars out of the reach of potential victims.

Representing many alleged victims, attorney Jeff Anderson is saying that in addition to the money being sheltered, the filing is also a way to "conceal the truth about predator priests in this diocese."

Along with other critics, Anderson is saying the bankruptcy proceedings may limit victims' access to secret records needed to expose additional actions of sex abuse by predator priests and senior Church leaders. The filing stifles what's called the discovery process in such lawsuits. First filed in state court, the cases are transferred by the bankruptcy process over to the purview of a bankruptcy judge.

"Those secrets should come out and the men who allowed abuse to continue should be held responsible," the Survivors Network of those Abused by Priests, or SNAP, stated. "Without full knowledge of what went wrong in these cases, we cannot hope to prevent them again in the future."

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