Albany Catholic Diocese files for bankruptcy

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Facing lawsuits on multiple fronts, the Roman Catholic Diocese of Albany has declared bankruptcy.

The diocese says parishes and Catholic schools are separately incorporated under New York State’s Religious Corporations Law and are not part of the filing.

Hundreds of lawsuits have been brought against the diocese since the Child Victims Act went into effect in August 2019. The law created a one-year look-back period, during which time civil cases could be filed by adults who claimed they were victims of sex abuse as children. Gov. Andrew Cuomo later signed a bill that extended the look-back period to Jan. 14, 2021.

Bishop Edward Scharfenberger said in a news release that, “as more Child Victims Act (CVA) cases reached large settlements, our limited self-insurance funds, which have been paying those settlements, have been depleted.”

The bishop says the Chapter 11 filing is the best way to ensure victims will receive some compensation.

“The decision to file was not arrived at easily and I know it may cause pain and suffering, but we, as a Church, can get through this and grow stronger together,” Scharfenberger’s statement said.

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One of the many cases targeted Bishop Emeritus Howard Hubbard. He has denied the allegations against him.

The diocese website lists more than 50 priests it says have been credibly accused of sexual misconduct with a minor.

Impact on St. Clare’s Pension Crisis

The clergy sex abuse scandal isn’t the only source of legal trouble for the diocese. About 1,100 retired employees of the diocese-run St. Clare’s Hospital in Schenectady lost their pensions. The retirees sued the diocese.

So did state Attorney General Letitia James. She accused the St. Clare’s Corporation of deliberately breaking the law, ignoring a process that denied St. Clare’s workers the money they depend on to get them through their retirement years.

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A judge ruled in December that the cases brought by the pensioners and the attorney general should be consolidated into a single lawsuit.

However, the bankruptcy filing puts the St. Clare’s case on hold. The diocese claims that was not the purpose for the filing.

Scharfenberger released a YouTube video where he addresses the bankruptcy filing.

The Albany Diocese is not the first in the region to file for bankruptcy. Dioceses in Buffalo, Rochester and Springfield, Massachusetts have also declared bankruptcy in recent years.