Bankruptcy in Buffalo?

Is the Diocese of Buffalo (DOB) going to file for Chapter 11 bankruptcy? That’s a question on many minds here in Western New York.

Last Wednesday, DOB credit card holders received a memo informing them that the diocese’s current (HSBC) credit card account is being closed. It also informed them that they would be updated soon regarding the replacement card program. A WGRZ reporter immediately took this as a sign of an impending bankruptcy announcement as this story makes clear.

As for me, I don’t believe the credit card situation is as pertinent as is being suggested. For one thing, I know that the diocese has had issues with their HSBC credit cards for at least a few years now. Well do I recall the time that Father Ryszard’s card got hacked and someone ordered hundreds of dollars worth of food via UberEats somewhere in California. I remember that it was a hassle for Father (and the Accounts Payable staff member) to work it out with HSBC. We did have a good laugh over it though… especially because of the time difference, which suggested that someone was ordering large amounts of food well into the night!

So I’m aware that the diocese has been planning a credit card switch for a while now. I’ve confirmed with an inside source that over a month ago, DOB officials were making arrangements to switch from HSBC to another bank for their credit cards. In other words, this credit card switch is most likely an independent occurrence that is being given greater importance than it merits due to the timing of the announcement. It seems to me that it was an unrelated situation that became significant to those looking for clues as to impending bankruptcy.

The Diocese of Rochester surprised everyone when they filed for Chapter 11 bankruptcy on September 12th. No one saw that coming especially since Rochester has far fewer CVA claims than Buffalo does. Yet the Rochester diocese decided to pursue Chapter 11 in order to protect itself against the financial fallout of those legal claims.

When Bishop Malone’s interview with WGRZ was released on September 18th, it was no surprise that he was asked about bankruptcy. The interviewer noted that the Diocese of Rochester had become the 20th US diocese to file for bankruptcy and asked whether the DOB was heading in the same direction. To this, Bishop Malone answered: “To be honest with you, we’re trying to figure that out now and that’s the honest to God truth.” When asked about the time frame for such a decision, Bishop Malone said: “There’s a debate going on among the experts [we’re conferring with] as to whether we should litigate – or try to litigate – or file chapter 11. That is an ongoing debate.” I’ve been curious on that point… just who is debating whom? We’ll return to this question in a paragraph or two.

Since that interview with WGRZ, the Bishop has met with two important groups – the College of Consultors and the Presbyteral Council. Both meetings occurred on the same day – Tuesday, September 24th. The College of Consultors is the most important of the “canonically-defined diocesan consultative bodies,” as the USCCB refers to them. The College of Consultors “assists the diocesan bishop in the governance of the diocese in accord with the provisions of Church law. For particular exercises of ecclesiastical governance, canon law requires that the diocesan bishop consult the college, and even obtain its consent. The college is comprised of no less than six priests, and no more than twelve, who are members of the presbyteral council.”

To my knowledge, the last time the College of Consultors was convened was in the spring of 2018 when Bishop Malone was deciding to sell the residence on Oakland Place. He called a meeting of the College to obtain their acceptance of his decision to put the residence on the market. I believe they had to sign their names to their acceptance of the decision to sell. I definitely remember that it was a big deal that the College was convened as it happened so infrequently.

As for the Presbyteral Council meeting on the 24th, I’ve learned that it was a “highly controlled” meeting, as usual, and focused largely on the bankruptcy question. The priests were told that the DOB is still weighing its options on the matter and Bishop Malone did not give any hint as to which way they were leaning. He had to leave the meeting early to catch a flight to NYC for the NYS Board of Bishops meeting on the 25th.

This was a regular meeting of the bishops of New York State – not one called for an urgent or unusual purpose. Were the bishops talking about bankruptcy at their meeting? I can only imagine that they were. Buffalo can’t be the only diocese that is contemplating or at least considering that legal move. The Diocese of Brooklyn, for instance, has many more lawsuits against it than Rochester does. As the chart below makes indicates, no diocese has had more lawsuits filed against it than Buffalo. This is due to the tragic number of perpetrators and thus victims in our area, but also because of the restrictive nature of the DOB’s IRCP program. More applicants were ineligible than were accepted, as this article makes clear. Because the DOB’s IRCP program rejected so many applicants, many more survivors ended up filing lawsuits under the CVA.

So we know the DOB is considering filing for bankruptcy. Bishop Malone has confirmed it while also referencing a “debate” among the “experts” he is consulting on the matter.

According to inside sources, this debate seems to be primarily between two entities:

Bishop Malone’s General Counsel and his Defense Attorney. 

As his website proudly proclaims, Joe Stoeckl has served as General Counsel for the Catholic Diocese of Buffalo and its related and affiliated entities for 40 years. He and his colleagues are in favor of a bankruptcy filing.  (I should note that I greatly enjoyed working with Joe and always felt he was a genuinely good man. If he turns out to be corrupt, I’ll pierce my ears.)

Terry Connors has been defending the DOB for nearly as long as I’ve been alive. He does not want the DOB to file for bankruptcy. Why?

BILLABLE HOURS.

Yes, you read that right. If the DOB files for bankruptcy, it would eliminate many, many billable hours for Terry and his firm. The CVA lawsuits would involve all sorts of legal counsel and legal work. Terry’s firm would charge “an arm and a leg” (source quote) for their work on each of the CVA cases. Terry Connors and his firm would lose millions of dollars if the DOB goes for bankruptcy. Please note that Terry and his firm have already received many, many millions of dollars from the DOB over the decades. Bishop Malone was asked about this very point during his recent WGRZ interview:

Question: “Why can’t parishioners know what’s being spent on legal advice – it’s the money they give to you… shouldn’t they know how much is spent on lawyers?”

Bishop Malone’s response: “We have had a longstanding policy that prevents us from giving that kind of information out about our vendors. It’s up to those vendors if they wish to give that information out. It’s a worthwhile question to be pursued, but the point at which the response finds itself right now is we don’t feel that’s an appropriate way to go.”

Of course they don’t feel it’s an appropriate way to go! The people of the Diocese of Buffalo and the WNY community in general would be shocked at the amount of money given to Terry Connors and his crew each year. And as if Terry would ever “wish to give that information out.” Yeah right.

Any discussion of bankruptcy must necessarily include the question of insurance. At the Bishop’s final listening session on August 17th, he shared the following information regarding the insurance element of the bankruptcy question:

“I’ll just tell you this – a new term I’ve learned in this whole process by working with an expert attorney from New York who is doing what’s called ‘insurance archaeology.’ It means digging deep into the dioceses and parishes to find every single insurance policy that has ever existed to see what’s covered for these kind of cases and what isn’t. Sometimes parishes in the past had their own insurance policy and so the archaeology term is appropriate because sometimes they have to go down into old files and boxes in the basement of the rectory and they’ll say ‘Aha! Here’s the policy that covers the 1980’s.’ We have periods of time when many of these abuse cases happened when we had insurance for these kinds of offenses. They’ll be some gaps though. So that’s all going on right now. So there’s a lot of work behind the scenes and there’s no decision at this point about which way we’re going to go with that.”

It appears that the insurance archaeologists have done their work for I have learned from a trusted source that “except for two years, the Diocese is covered by insurance for all settlements and litigation.” According to this insider source, bankruptcy should not be necessary for the Diocese of Buffalo. Terry Connors must have been thrilled to receive the insurance information.

Will the DOB file for bankruptcy? It shouldn’t need to.

A bankruptcy filing would mean that survivors go from being claimants in front of a jury to creditors in front of a bankruptcy court. The vital discovery process – a primary goal for survivors – would be eliminated by bankruptcy.

In my opinion, it will all come down to the money. Will Terry Connors get his way… and his millions?

It’s deeply saddening to realize that Bishop Malone is more likely to consider what’s best for Terry than what’s best for survivors.