Rockville diocese files new plan with $200 million survivor settlement

By Sarah Lizee

Olympia, Wash., Nov. 28 – The Roman Catholic Diocese of Rockville Centre, New York has filed a first amended Chapter 11 plan of reorganization and disclosure statement, according to a Tuesday morning press release.

The diocese said the plan offers a total of $200 million in compensation as its best and final proposal for settling with survivors of abuse.

“This first amended plan is the best, most efficient and most effective means to immediately begin compensating all eligible survivors equitably while allowing the diocese to emerge from bankruptcy and continue its charitable mission,” the diocese said in the release.

“The diocese filed this plan, which includes a record setting settlement offer in the amount of $200 million from the diocese, parishes, and related parties to compensate survivors and bring this case to a fair and final resolution.”

The diocese said that it agrees with judge Martin Glenn, who is overseeing the case, that survivors have waited too long for compensation and that any alternative to a global settlement plan creates chaos that puts both survivor compensation and the futures of parishes at risk.

Under the plan, the $200 million settlement fund includes a diocesan contribution of $50 million and a contribution of $150 million from parishes, co-insured parties, and other Catholic ministries.

In addition, the diocese and all affiliate parties are contributing the value of their substantial rights against third-party insurance companies as part of the plan.

The proposed payout represents the largest settlement offer ever made in a diocesan bankruptcy in the country, both on a total payout and per claimant basis, the diocese said.

The plan offers an immediate minimum cash payment of $100,000 to each claimant with a lawsuit against a non-debtor contributor.

It offers other claimants without qualifying lawsuits an immediate minimum cash payment of $50,000.

The balance of the remaining settlement funds would be paid to settlement trusts and allocated to creditors based on trust distribution protocols.

Funds from insurance coverage proceeds will be added to these settlement trusts to fund additional substantial payouts to survivors.

“The unsecured creditors’ committee’s litigation alternatives are rife with uncertainty,” the diocese said.

“Further litigation will delay compensation for all survivors, may result in unfair compensation for many survivors, and could ultimately leave some survivors with no compensation at all.

“The alternative path favored by the unsecured creditors’ committee will needlessly run up litigation expenses and continue to erode assets of the diocese, parishes and other co-insureds.”

Under the plan, survivors will have the opportunity to choose immediate compensation for all survivors.

A vote to reject the plan in sufficient numbers may lead to dismissal of the Chapter 11 case, and force survivors to move their claims back to state court, where they will once again be in a first-come, first-served litigation dynamic in the trial-court system, the diocese said.

This path will also delay any resolution for the majority of claimants, as about 60% of the cases involving the diocese and its affiliates are stayed from proceeding in state court by the insolvency of the Arrowood Indemnity Co., the diocese added.

“The minority of survivors and their counsel with unstayed cases could race to the front of the line,” the debtor said.

The diocese noted that it has proposed a streamlined calendar to ensure that the survivors can receive their settlement payments in the first quarter of 2024.

The Rockville Centre, N.Y.-based diocese filed bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Oct. 1, 2020 under Chapter 11 case number 20-12345.

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