Albany Diocese Creditors Challenge Bankruptcy Insurance Deals

A group of junior creditors in the Albany diocese’s bankruptcy said they are concerned that a pair of settlements worth $9 million among the Catholic church, insurers and child sex abuse claimants could unfairly exclude other claimants.

The funds that the insurers would contribute to the diocese in exchange for liability releases only benefit abuse claimants, a committee of unsecured creditors said in an Oct. 24 letter filed in the US Bankruptcy Court for the Northern District of New York.

“The settlements are directing the use of insurance proceeds which are property of the estate to favor some creditors over ...