Diocese of Rockville’s claim objection procedures draw committee objection

By Sarah Lizee

Olympia, Wash., Dec. 13 – The Roman Catholic Diocese of Rockville Centre, New York’s motion seeking approval of claim objection procedures drew an objection on Tuesday from the official committee of unsecured creditors, according to documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said the diocese’s claims objection strategy will minimally affect the likelihood of a consensual plan and needlessly adds to the administrative expenses that will further deplete the debtor’s ability to fairly compensate over 600 survivors.

The group said it has carefully reviewed each of the sexual abuse claims filed in the case and understands there are claims filed that may be objectionable or may have to be significantly discounted for litigation risk.

“The committee maintains realistic expectations of what such claims may be worth and has told the diocese as much,” the committee said.

“Thus, contrary to the diocese’s description of the lack of progress in mediation resulting from ‘divergent views among the parties as to the number of appropriate proofs of claim in this case,’ the real issue is the parties’ failure to fund an adequate contribution in exchange for discharges and releases.”

The committee said claim objections won’t move the case forward because the committee has already factored into its expectations the issues that the diocese will raise in its objections.

“The claims objections will be expensive (reducing amounts available to pay claims), time-consuming and will delay any opportunity for consensual resolution,” the committee said.

The group said that allowing cases against non-debtors to move forward in a state court is a more cost-effective option.

State court litigation would also inform the parishes of the magnitude of their liability, thus rationalizing the expectations of all parties regarding the value of the claims and motivating all parties to resolve the claims through the bankruptcy, the committee said.

“In other diocesan cases, abuse claims are dealt with post-confirmation through a process agreed to by the survivors with substantially less administrative expense and drain on the ultimate resources available to satisfy survivors by paying those funds to case professionals,” the committee added.

The Rockville Centre, N.Y.-based diocese filed bankruptcy on Oct. 1, 2020 under Chapter 11 case number 20-12345.

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