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What Would Bank­ruptcy Mean for the Buffalo Diocese?

On Behalf of | Feb 6, 2020 | Bankruptcy |

Bankruptcy is a process that many associate with gloom and doom. But experts say filing for Chapter 11 could bring with it some positive outcomes.

“Chapter 11 means reorganization,” said Scott Bogucki, Gleichenhaus, Marchese & Weishaar partner.

Bogucki, a Buffalo bankruptcy attorney, says filing Chapter 11 levels the playing field for those who’ve already filed or plan to file a claim against a business.

Should the Diocese of Buffalo file for bankruptcy, Bogucki says the move would keep hundreds of Child Victims Act cases from being heard.

“And I know this is a very sensitive topic. Some people would want their day in court, other people may want to be spared that. It will allow somebody to submit a claim without having to present evidence in a court of law and go through that whole process,” said Bogucki.

Bogucki says if the Diocese follows suit after the Diocese of Rochester filed for Chapter 11 last fall, there should be little to no impact on its churches and parishioners.

“It means business as usual to a certain extent. In the context of the Diocese filing, and what’s happened in Rochester, that we can see over the last few months is the parishes continue to operate,” said Bogucki.

“They’ve accumulated more debt than they can afford to pay for. So, yes it’s complicated but it’s not complex,” said Charlie Maclay, Next Point partner.

Consultant Charlie Maclay from Next Point in Buffalo has been dealing with bankruptcy-related financial matters for more than 40 years.

He says leading up to a filing, corporations like the Diocese of Buffalo should be finding ways to generate cash flow and close non-performing businesses like it did with Christ the King Seminary.

“It didn’t generate a surplus. So those activities are normal and they really ramp up once you’re in Chapter 11,” said Maclay.

Maclay says the court will look to the Diocese to propose a financial plan which could include selling off its assets.

“That’s part of the bankruptcy process to fair it out. A referee over most issues. It creates an umbrella where people can negotiate out their differences,” said Maclay.

Both Maclay and Bogucki believe there is light at the end of the tunnel for a Diocese that may look a little different in the end but is still economically viable.

Bogucki says the process to stabilize and generate enough revenue to the support the operation could take two to three years, though resolving the claims could take a lot longer.

“That’s the goal of any Chapter 11 is to sort of streamline whatever’s causing the problem, assuming it’s these claims, those get handled and then they’re able to continue on with what they were doing, and come out on the other end,” said Bogucki.

Again, the Diocese of Buffalo has not filed for bankruptcy, but says it’s working through a number of complex issues before that decision will be made.

Click here for more information and to see Attorney Bogucki’s interview on Spectrum News : https://spectrumlocalnews.com/nys/buffalo/news/2020/02/06/experts-discuss-the-road-to-potential-bankruptcy-for-the-diocese-of-buffalo