More than three years after the Roman Catholic Diocese of Oakland filed for Chapter 11 bankruptcy, a federal judge has refused to approve its plan to get out. In a 109-page decision signed Oct. 2, U.S. Bankruptcy Judge William J. Lafferty III ruled the plan could not be confirmed, a result attorneys for abuse survivors are calling a win.
What the plan would have done
The diocese's plan was meant to resolve nearly 350 sexual abuse claims, NBC Bay Area reported, some dating back to the 1960s. Bloomberg Law described it as built around a $172 million cash payment to claimants. The committee representing survivors opposed it, and NBC reported that nearly every survivor with a pending claim did too.
Why the judge said no
The key problem was a basic bankruptcy test: creditors who vote against a plan must get at least as much as they would if the debtor were liquidated. Lafferty found the diocese had not met that burden. He also questioned how the diocese valued its assets, which include churches, cemeteries and other property around the East Bay, and how much it expects to owe survivors, according to the Chronicle.
The judge also rejected the argument that the diocese deserved special treatment because it is a religious institution. He wrote that its status did not entitle it to be treated "differently or more leniently" than any other nonprofit or business in bankruptcy, the Chronicle reported.
What happens next
The ruling doesn't end the case. Lafferty included guidance on other disputed issues in the hope it would help both sides if they resume talks or the diocese proposes a new plan, and he urged "continuing dialogue and relentless good faith," NBC reported.
Bishop Michael Barber told Catholics in the diocese that the judge laid out what needs to be fixed and that the diocese will study the decision. Jeff Anderson, an attorney for survivors, said he hopes to work with the bishop "to bring speedy justice to the suffering."
The diocese filed for bankruptcy in 2023 after more than 330 people brought abuse claims. It has kept churches open during the case, but earlier this year announced it would close 13 East Bay churches, citing financial strain from the lawsuits.