The sexual abuse scandal in the Catholic Church has been making headlines for years as more and more people come forward with the stories of abuse they suffered years or even decades ago. As churches attempt to deal with the scandal, many have had to pay out substantial sums to victims through litigation and through compensation programs. A rise in lawsuits occurred after some states, including New York, have temporarily suspended the statute of limitations on child sex abuse litigation, and have permanently extended the deadlines for filing this litigation after the lookback window is closed.

As a result of the litigation from the sexual abuse scandal, some churches have had to file for Chapter 11 bankruptcy. The Catholic Dioceses of Rochester and Buffalo are two such groups that filed for bankruptcy because of sexual abuse scandal litigation.

Now, amidst the coronavirus pandemic, these dioceses have turned to litigation themselves, filing a federal lawsuit against the U.S. Small Business Administration. The dioceses claim that they were improperly excluded from the SBAs’ Paycheck Protection Program. Sexual abuse scandal lawsuits against churches were also postponed during the pandemic.

Bankruptcy and the Paycheck Protection Program

The PPP was passed in late March as a method of providing small businesses with money to help them pay workers for two months. Each applicant could receive up to a $10 million loan with a 0.5 percent interest rate. The terms of the loan noted that the loan could be completely forgiven provided that all employees were retained and the loan money used for payroll, rent, mortgage interest, or utilities.

In total, the PPP had $350 billion, which dried up in about 13 days.

Some organizations were excluded from access to loans from the PPP, such as entities in bankruptcy like the Rochester and Buffalo dioceses. According to their complaint, the rules of the program did not expressly exclude any entity in bankruptcy proceedings, but then the PPP’s lender application form states that “the PPP loan cannot be approved unless the applicant certifies that neither the applicant nor any owner is presently involved in any bankruptcy.”

The Dioceses of Rochester and Buffalo filed a lawsuit in Mid-April, alleging that their exclusion from the PPP, along with other entities in bankruptcy, are “unlawful, discriminatory against prospective borrowers who are debtors in bankruptcy, and beyond its statutory authority.”

The dioceses are facing “a significant decrease in revenue,” in large part due to the indefinite stay at home orders, which means that offertory collections during mass, including Easter Sunday mass, are not collected in the traditional ways. They are also suffering from the Roman Catholic Church sexual abuse scandal. The dioceses allege in their lawsuit that the lack of a PPP loan will mean that the dioceses will be “forced to lay off or furlough essential employees”.

The Archdiocese of Santa Fe, New Mexico, filed a similar lawsuit a few days later.

Other Catholic entities have received PPP funding. Ten schools in the Diocese of Nashville, Tenn., are still paying part-time workers even when they are not coming in to work due to stay at home orders. There are six more diocesan schools in Nashville which have not yet received funding, but are expected to receive loans provided the PPP’s funding is replenished.

In total, hundreds of Catholic parishes, elementary schools, and high schools received assistance through PPP funding.

Filing Catholic Church Sex Abuse Litigation

If you or someone you love has suffered from childhood sex abuse in New York, even if that abuse took place years or decades ago, you may be able to file a lawsuit and pursue compensation under the New York Child Victims Act.  Filing a lawsuit cannot take away the pain and suffering caused by the trauma of sexual abuse, but it can at least help to alleviate the financial burden incurred by medical expenses, lost wages, and more.

This article is not legal advice. It is presented
for informational purposes only.