Syracuse, N.Y. — The conclusion of the Roman Catholic Diocese of Syracuse’s bankruptcy has been further delayed as lawyers rework key documents following a recent U.S. Supreme Court ruling.
The judge handling the case, Wendy Kinsella, suspended all upcoming deadlines in the case, including a November hearing on final approval for the diocese’s proposed plan to exit bankruptcy. The judge said she will re-evaluate the case at a Sept. 18 hearing.
Kinsella said during a hearing Thursday afternoon that she is “highly sensitive” to requests to keep the case moving. But, she added, “the court simply can’t proceed under a scheduling order formulated under a plan that is no longer being pursued.”
The ruling by the Supreme Court earlier this summer struck at the heart of the diocese’s proposed plan, which would distribute $100 million to abuse survivors if they agree not to pursue further legal claims against the diocese and more than 250 other Catholic institutions.
The court ruled in late June in an unrelated case involving Purdue Pharma, the company at the center of the opioid crisis, that such an arrangement to forbid legal action can violate federal bankruptcy law.
In a 5-4 decision, the court said these protections can’t be provided without proper “consent” from anyone affected to organizations that didn’t themselves declare bankruptcy. It did not specify how consent would be shown.
Diocese lawyers originally said they thought the bankruptcy exit plan didn’t need to change to meet the Supreme Court’s new standard. They then proposed “limited” changes to the plan that could be filed next week.
Now, they say “surgical” changes will be submitted during the week of Sept. 9.
“These are cutting-edge issues,” said Stephen Donato, the diocese’s lead bankruptcy lawyer. “We want to make sure we get it right.”
The ruling added new uncertainty to the bankruptcy case, which had been pending for four years and seemed to be nearing its conclusion. It arrived as creditors voted on the proposed plan, with a hearing on final approval set for the fall.
All but two of the 305 survivors who submitted ballots voted in support of the plan, according to results released by the diocese. An additional nine eligible voters did not cast a ballot.
Creditors will likely have to vote on the new plan once it is submitted.
A government-appointed trustee had previously warned against continuing to advance the proposed plan before a ruling had been made in the Purdue case.
The centerpiece of the 81-page bankruptcy exit plan is the $100 million fund to pay abuse survivors if they end their lawsuits against the church.
Bishop Douglas Lucia previously said the diocese would cover half of the $100 million fund, with the rest paid by parishes, schools, missions and Catholic Charities. If split evenly among the parishes, each would face an average bill of nearly $400,000.
The $100 million is what local Catholic institutions have agreed to pay on their own to survivors; any money from insurance companies would be on top of that money, officials said.
Headquartered in Syracuse, the diocese has nearly 200,000 members across 116 parishes in seven counties, 10 missions and seven oratories. It employs about 3,000 people.
Staff writer Jon Moss covers breaking news, crime and public safety. He can be reached at jmoss@syracuse.com or @mossjon7.