Federal judge rejects the Oakland Diocese’s bankruptcy plan

A federal judge has rejected the Oakland Diocese’s bankruptcy relief plan that would have resolved nearly 330 sexual abuse claims. The judge’s Oct. 2 decision comes three years after the Oakland Diocese filed for bankruptcy due to declining participation and an ongoing financial crisis linked to sexual abuse cases dating between 1960 and 1990.

Judge William J. Lafferty dismissed many of the diocese’s arguments in its bid to settle through bankruptcy, including wanting special considerations given its status as a religious institution, the diocese’s valuation of its many real estate assets, and the total amount owed to survivors. According to the diocese’s bankruptcy plan, submitted two years ago, the church owes between $160 million and $198 million.

As part of the Chapter 11 case, the diocese is to sell 13 churches in the East Bay, 7 of them in Oakland.

“The Court stresses, again, that the insufficiencies of this Plan arise from failures of proof, not of conception,” Lafferty wrote in his 109-page decision. “It may be that another plan would require a different or larger contribution from the Debtor, but it is far from clear to the Court that such a proposal is impossible — and some aspects of the current Plan, including the alternative sources of payment to the Survivors’ Trust contained in this Plan, suggest that an alternative plan is realizable.”

When the diocese filed for bankruptcy, the Office of the United States Trustee appointed a nine-member official committee that has since been actively working with the diocese in overseeing the administration of the Chapter 11 case, operations, and business plans. All members of the committee unanimously rejected the diocese’s plan.

In a letter dated Oct. 2, Bishop Michael C. Barber wrote, in response to the court’s decision, “While today is a setback, we remain committed to providing fair and equitable treatment for the survivors, and to continuing our mission to proclaim the Gospel of Jesus Christ in service to the 500,000 faithful Catholics in our community.” The letter is posted on the Oakland Diocese’s Chapter 11 page on its website.

Barber issued an apology to survivors in 2024, writing “I see the pain and destruction that was perpetrated by representatives of the Church. Like my predecessor bishops before me, I convey a sincere, complete, and unconditional apology. I am deeply sorry.”

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This story was originally published by The Oaklandside and distributed through a partnership with The Associated Press.