Abuse settlement in Diocese of Ogdensburg will total $83 million with insurance contributions

Parishes in the New York diocese will also undergo a notable bankruptcy proceeding called “rapid pre-pack Chapter 11.”

The Diocese of Ogdensburg, New York, is moving to settle its long-running bankruptcy proceedings with an $83 million fund for abuse victims, Bishop Terry LaValley has announced, with a significant portion of that amount coming from insurance providers.

The bishop announced the proposed settlement in an Aug. 25 letter to the diocese. The diocese had earlier announced a $45 million agreement in May.

A diocesan spokeswoman confirmed that the additional roughly $38 million would come from insurance contributions.

In his August letter, LaValley said the diocese was hoping to have the plan approved by the bankruptcy court “in the next few months.” The Ogdensburg Diocese filed for bankruptcy in July 2023, the sixth diocese in New York state to do so.

The bishop urged Catholics to pray for both abuse victims as well as the diocese itself. He described the reparation payments as a “moral obligation” on the part of the diocese.

‘Rapid pre-pack’ bankruptcy

In his letter, LaValley said the parishes in the diocese will undergo a notable bankruptcy proceeding called “rapid pre-pack Chapter 11,” one that will settle current abuse allegations while protecting parishes from future litigation.

“Each of our parishes will file a Chapter 11 case at the very last moment, after we know whether we have sufficient votes to confirm the plan,” the bishop said. Parishes are anticipated to be in bankruptcy for about 48 hours before emerging “quickly,” he said.

“The result is that the diocese and parishes will receive a bankruptcy discharge of all alleged abuse claims as of the date the parishʼs pre-packed bankruptcy is filed,” the bishop said. “Going forward, no abuse claims may be brought against parishes from prior to that date.”

The bishop said the unique strategy emerged after a June 2024 Supreme Court decision on bankruptcy, likely a reference to the U.S. Supreme Court’s ruling that month in Harrington v. Purdue Pharma L.P.

That ruling on a complex provision of U.S. bankruptcy law meant that individual parishes and schools in diocesan abuse proceedings could be sued, greatly expanding the possibility of large numbers of expensive lawsuits against Catholic entities.

LaValley said the diocese had been advised that the “rapid” bankruptcy proceeding “is the only viable and realistic way to obtain comprehensive relief” for all diocesan entities there.

A similar strategy had been used in the Diocese of Rockville Centre, New York, and the Archdiocese of New Orleans, he said.