CREDITORS COMMITTEE FILES REORGANIZATION PLAN FOR DIOCESE OF ROCKVILLE CENTRE; DIOCESE OF ROCKVILLE CENTRE FILES REORGANIZATION PLAN IN RESPONSE

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Jan 27, 2023, 17:33 ET

NEW YORK, Jan. 27, 2023 /PRNewswire/ -- The Official Committee of Unsecured Creditors ("Committee"), the fiduciary for all survivors of child sexual abuse ("Survivors") in the Chapter 11 case of The Roman Catholic Diocese of Rockville Centre ("DRC"), took the extraordinary step to file its own plan of reorganization for the DRC after more than two years of the Diocese of Rockville Centre, its parishes, and affiliates failing to make a reasonable offer to sexual abuse victims. The Committee's plan requires the DRC to contribute cash and assets to compensate over 600 survivors of child sexual abuse. The Committee's plan offers opportunity for settlements with the DRC's parishes and affiliates, several of which received alleged fraudulent transfers in cash and property worth hundreds of millions of dollars and many of which are individually liable for claims of Survivors for 100s of millions of dollars. The plan also offers opportunity for settlements with several of the DRC's general liability carriers in amounts that are the subject of confidential mediation. The Committee's plan is based on the Committee's extensive discovery of the DRC's assets and transfers designed to hide the Diocese's assets from survivors. The Committee will seek court approval of a disclosure statement so Survivors then can vote on the Committee's reorganization plan.

"The Committee filed its own plan because the Diocese of Rockville Centre continues to refuse to respond to a Committee settlement offer that was made more than two months ago. The Diocese forced the Committee's hand when the Diocese abdicated its responsibility as a party to Court-ordered mediation and as a fiduciary to all creditors," said Richard Tollner, Chair of the Committee. "Tragically, some survivors who started with us have passed away but their stories and their courage have reinforced the Committee's dedication to achieve a fair and reasonable settlement that includes protections for today's children."

In response to the Committee plan, the DRC filed its own plan without the support of the Committee. The DRC plan has a minimal financial contribution of $11.1 million from the parishes and affiliates (totaling more than 300 different entities) who receive a complete release of liability for 600 abuse sexual abuse claims and largely relies on the assignment of potential insurance policy recoveries that the carriers who sold the policies are actively disputing in four separate lawsuits. The DRC's plan is "business as usual" regarding child protection measures although some of the over six hundred abuse claims arose after the so-called reforms proposed by the U.S. Conference of Catholic Bishops.

The DRC also has started a process of objecting to Survivors' claims. This strategy is rarely employed in Catholic Church bankruptcies. Typically, claims disputes are handled by a procedure in a consensual plan that saves everyone substantial legal fees and costs and minimizes the possibility of re-traumatizing sexual abuse survivors. However, the DRC is taking a scorched earth approach with the Survivors sexually abused as children. The DRC is continuing its decades-long pattern of employing "aggressive legal strategies . . . to defeat and discourage lawsuits even though Diocesan officials kn[o]w they were meritorious," as observed by the Suffolk County Grand Jury in 2003.

"The Diocese has adopted a litigation path that ultimately will fail and will have wasted millions of dollars. The Committee always has stood for fair compensation and transparency. The DRC has fought the Committee at almost every turn. The members of the Committee have devoted hundreds of hours over more than two years to getting the right result for all Survivors. This case poses the unique challenge that the DRC refuses to negotiate with the Committee and is attempting to bully Survivors into submission," said James Stang of Pachulski Stang Ziehl & Jones LLP, bankruptcy counsel to the Committee.

SOURCE Pachulski Stang Ziehl & Jones