Mediators step-in to oversee negotiations with the diocese

Two high-power mediators have been appointed to oversee negotiations between the Diocese of Rockville Centre and the survivors of more than 600 child sexual abuse allegations, filed by a Committee of Unsecured Creditors, in a last-ditch attempt to try to reach an equitable solution.

On May 15, Judge Martin Glenn, of the United States Bankruptcy Court for the Southern District of New York, appointed retired U.S. Bankruptcy Court Judge Shelley Chapman and attorney Paul Finn, who have resolved a number of high-profile bankruptcy and sex abuse claims, in the hopes of reaching a settlement.

The decision was made following an April 12 motion by the diocese to dismiss Chapter 11 bankruptcy proceedings, after what church officials referred to as its “best and final offer” was rejected by a supermajority of its creditors.

According to Newsday, Glenn said he had been hesitant to dismiss the case, due to the possibility that it could result in the diocese being hit with large penalties during its first few cases. His concern is that if the diocese were to handle things on a case-by-case basis, a large payout in the early goings of the proceedings could run the risk of leaving no money left for hundreds of other survivors.

Following the hearing, Glenn met with attorneys representing both parties and expressed his disappointment that the case could not be resolved consensually. But he did not rule on the motion to dismiss the case, opting for a final attempt at mediation.

“The judge is not deciding the motion to dismiss the bankruptcy case until new mediators have the opportunity to facilitate a settlement,” a spokesperson for the diocese wrote in an email. “The diocese will participate in this renewed mediation effort and sincerely hopes that the Creditors will abandon their demands for an additional quarter of a billion dollars above the diocese’s $200 million offer — the highest ever made by a diocese in bankruptcy. Absent a more realistic approach which does not threaten to destroy parishes, schools and other vital ministries throughout Long Island, the diocese is prepared to revive the motion.”

“We’re glad to have another opportunity to try and get the case settled,” James Stang, one of the lead attorneys for the survivors, said. “The diocese needs to back off of its ‘last and final offer.’ If their condition is they have nothing more to say to us, it’s going to be a very short mediation.”

If the court were to dismiss the case, the diocese, the eighth-largest in the nation, would be the first to potentially see hundreds of cases of sexual abuse remanded to state civil courts.

The diocese filed for bankruptcy in late 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 proposed a reorganization plan for the diocese in January 2023, offering to settle the claims for $450 million. The diocese responded with a $200 million counter-offer, which was rejected in April 2023 by the committee, which said that the offer did not provide adequate compensation for the survivors’ suffering and lacked any child-protection measures.

The diocese then moved to dismiss the case last month.

Glenn said he hoped that with the involvement of Chapman and Finn, the two parties would be able to come to an agreement.

Chapman, who retired in 2022, presided over the landmark 2008 bankruptcy case against Lehman Brothers Holdings, one of the largest Chapter 11 cases in U.S. history.

Finn has mediated more sexual abuse claims than anyone in the country, including 552 claims of alleged sexual abuse against the Archdiocese of Boston.