Diocese nears deal with sex abuse survivors

The Diocese of Rockville Centre and the survivors of more than 600 child sexual abuse allegations filed by a Committee of Unsecured Creditors have reached a tentative agreement, potentially laying the foundation for a settlement, after nearly four years of legal wrangling.

While neither side has yet to disclose the agreement’s details, their representatives have indicated that the only remaining holdout is a final offer from Interstate Fire and Casualty, one of the insurance companies that would be involved in any payout to the survivors.

James Stang, one of the lead attorneys representing the survivors, said he was “extremely pleased and flabbergasted” that a plan is close to completion.

“We have an agreement with the church side on the amount of money that will be contributed … and who will be released in exchange for those contributions,” Stang told the Herald.

He attributed the success of the negotiations to two high-powered mediators, U.S. Bankruptcy Court Judge Shelley Chapman and attorney Paul Finn, who were appointed by Judge Martin Glenn, of U.S. Bankruptcy Court for the Southern District of New York, to try to work out a deal after numerous failed attempts to reach a solution that both sides deemed equitable.

“The Creditors’ Committee and the Diocese have come to a tentative agreement on terms for a potential settlement of the bankruptcy case,” an unidentified spokesperson said in a statement on behalf of the diocese. “Agreements with insurance carriers are still pending. For the sake of survivors and the Church’s ongoing mission on Long Island, we pray that a global settlement plan can be approved and completed as quickly as possible.”

According to Newsday, Glenn expressed his frustration last week with the insurance company for holding up the settlement, and ordered one of its top executives to meet face to face with mediators in New York. In a statement following that meeting, another unidentified spokesperson for the diocese said, “Judge Glenn admonished the Interstate Insurance Company to submit its final offer, since the Creditors’ Committee and the Diocese have come to a tentative agreement on the terms of a potential settlement of bankruptcy case.”

The Diocese of Rockville Centre, the eighth-largest in the country, filed for bankruptcy in October 2020, after hundreds of lawsuits were filed against it following Gov. Andrew Cuomo’s approval of the Child Victims Act in 2019, which extended the statute of limitations for sexual abuse claims.

Representatives of the survivors’ committee first proposed a reorganization plan for the diocese in January 2023, offering to settle the claims for $450 million. The diocese responded a month later with a $200 million counter-offer, with contributions to be made by the diocese, its parishes, co-insured parties and other members of the ministry, not including insurance payouts.

The committee rejected the counter-offer in April 2023 and moved to dismiss the bankruptcy case, due to the unlikelihood of reaching a consensus, potentially remanding hundreds of the sexual abuse cases to the state civil courts.

Having determined that the attorneys for the survivors could not substantiate being unable to settle within a “reasonable amount of time,” Glenn rejected the committee’s motion, and in July 2023 he offered the diocese a 100-day window to try to reach an agreement with the survivors.

The $200 million proposal, which the diocese referred to as its “best and final” attempt at a reorganization plan, was ultimately rejected by a supermajority vote of the survivors in April, for not providing adequate compensation for their suffering and lacking any child-protection measures.

In response, the diocese sought to dismiss the case, which prompted Glenn to bring in mediators to try to avoid remanding the individual cases to the state courts. His concern was that if the diocese were to handle things on a case-by-case basis, a large payout in the early goings could risk leaving the diocese with no money for hundreds of other survivors.

Chapman, who retired in 2022, presided in the 2008 bankruptcy case against Lehman Brothers, one of the largest Chapter 11 cases in U.S. history. Finn has negotiated more sexual abuse claims than anyone in the country, including the 552 claims brought against the Archdiocese of Boston in 2002. Since then, 38 Catholic dioceses and religious organizations have sought Chapter 11 bankruptcy protection. To date, only 24 of the cases have concluded.

Stang said that because the survivors have reached agreement with several of the insurance carriers, he did not feel that the issue with Interstate would disrupt the overall settlement. He explained that while he was optimistic, he has to contemplate what continued litigation would mean for his clients.

“It is a time issue and a cost issue,” Stang said. “That is why we would like to have a global resolution. My clients don’t have time, and the attorney fees are a story unto themselves.”

Representatives of Interstate were expected to meet with mediators and attorneys for both parties on Thursday, after press time, to try to resolve the issue.