Here is a Bloomberg Businessweek article about the Catholic Church weaponizing the bankruptcy code to manage sexual abuse cases that have been lobbed against it over the years. It’s brutal. Here’s the deal:

More dioceses are filing for bankruptcy now that rules are changing about how much time a victim has to sue over abuse. Seven states and the District of Columbia passed laws in 2019 that suspend the statute of limitations on civil sex abuse suits, and at least three other states are considering them. Known as “window statutes,” they’ve become popular in the wake of the #MeToo movement and public outcry over abuse by men in power. Until recently, only a half-dozen states had them. Window statutes caused churches to declare bankruptcy in San Diego, Wilmington, Del., and cities throughout Minnesota.

After New York state’s law went into effect in August, almost 430 sex abuse victims immediately filed lawsuits, most of them against dioceses. The diocese of Rochester declared bankruptcy in September; bishops in Brooklyn and Buffalo announced that theirs may soon follow.

Indeed, there are eight dioceses in New York and they all may be in trouble. Just a few days ago, the Bishop of the Buffalo Diocese indicated that a bankruptcy is probable, noting, per The Buffalo News, that “‘it won’t be long’ before a decision is made on whether to file.” This comes after the Diocese of Rochester already filed for bankruptcy back in September. In “⛪️Another Catholic Diocese Goes Bankrupt (Short Trusted Institutions)⛪️,” we noted the following with respect to Rochester:

Earlier this year, the New York State Legislature passed the Child Victims Act (“CVA”) and Governor Cuomo signed the legislation into law in February. The CVA (i) opened a one-year “window” through which time-barred child sex abuse claimants could lodge claims and (ii) extended “the statute of limitations for claims that were not time-barred on its date of passage, permitting such child victims to commence timely civil actions until they reach 55 years of age.” The result? 46 lawsuits involving 61 plaintiffs (plus another 12 demand letters indicating future suits). Chilling numbers.

Here’s another chilling number: “[s]ince the mid-1980’s, the Diocese has settled 44 claims related to child sexual abuse.” No wonder people today have lost faith in our institutions.

Now multiply that across numerous other dioceses across the US. Brutal.

Those of you who’ve been reading PETITION know by now that bankruptcy channeling injunctions can be a highly effective way for companies to deal with an onslaught of legal claims. We’ve seen these in mass tort cases (i.e., Takata, soon in PG&E), and asbestos cases. Indeed, two manufacturers filed for bankruptcy recently to take advantage of this. This allows a debtor to put a certain amount of money in a litigation trust and all claims are channeled towards that trust for recoveries. The question is the funding of said trusts. And, according to Bloomberg, it is here that the Church is acting inimical to religious values.

In many cases, churches precede bankruptcy by transferring and reclassifying assets. The effect is to shrink the pot of money available to clergy abuse victims. That and Chapter 11’s universal settle­ments and protections from further claims have been an effective one-two punch for limiting payouts. A Bloomberg Businessweek review of court filings by lawyers for churches and victims in the past 15 years shows that the U.S. Catholic Church has shielded more than $2 billion in assets from abuse victims in bankruptcies using these methods. “The survivors should have gotten that money, and they didn’t,” says Terry McKiernan, president of BishopAccountability.org. “The Catholic Church has behaved like a business. It hasn’t behaved like a religion that lives by the rules it espouses.”

And people wonder why this country is becoming increasingly secular.