Judge Rejects Oakland Diocese's Bankruptcy Plan for Settling Hundreds of Abuse Claims

A federal bankruptcy judge has turned down the Roman Catholic Diocese of Oakland's plan to leave Chapter 11, a setback for the church more than three years after it filed for bankruptcy protection to deal with a wave of clergy sexual abuse claims.

U.S. Bankruptcy Judge William J. Lafferty III signed the decision on Oct. 2. In a 109-page ruling, he found the diocese had not met a core requirement of bankruptcy law: that creditors who vote against a plan receive at least as much as they would if the debtor were liquidated, NBC Bay Area reported. Nearly every survivor with a pending claim had opposed the plan, according to NBC Bay Area.

What the plan offered

The plan would have resolved several hundred abuse claims, most tied to abuse between 1960 and 1990, according to The Oaklandside. Bloomberg Law reported that it centered on a $172 million cash payment to claimants. The diocese filed the version the court reviewed, its modified fourth amended plan, in March 2026, and it was the only plan before the court after the survivors' committee withdrew its own proposal, the ruling says.

Lafferty wrote that the diocese had not carried its burden of showing the plan was in creditors' best interests. He also took issue with how the diocese valued its assets, and said the church should not get more lenient treatment under the Bankruptcy Code because it is a religious organization, according to NBC Bay Area and the law firm representing the survivors' committee.

Reactions

Attorney Jeff Anderson, who represents survivors, welcomed the ruling. "Now, hopefully, we can work with the bishop to bring speedy justice to the suffering," he told NBC Bay Area.

Lowenstein Sandler, counsel to the Official Committee of Unsecured Creditors made up of abuse survivors, called the decision one of major importance for religious nonprofits that seek bankruptcy protection.

Bishop Michael Barber said in a message to Catholics that the judge had laid out what needs to be corrected and that the diocese will study the decision, NBC Bay Area reported.

What comes next

The ruling does not end the case. Lafferty also addressed other legal arguments in the hope of guiding the parties if they resume talks or the diocese proposes a new plan, and he urged "continuing dialogue and relentless good faith" as the two sides work toward a resolution.