The Roman Catholic Bishop of Oakland has filed a third amended plan of reorganization that would provide approximately $143.5 million to settle hundreds of sexual abuse claims, according to court documents filed on March 17. The plan, which faces opposition from the committee representing abuse survivors, proposes substantial property sales and a complex payment structure stretched over five years.
The Diocese of Oakland, which filed for Chapter 11 protection in May 2023, outlined a settlement framework that would establish a Survivors' Trust funded by $115 million from the diocese and up to $28.5 million from the Roman Catholic Welfare Corporation of Oakland (RCWC), a separate nonprofit entity overseeing 32 elementary schools and two high schools within the diocese.
"Providing fair and equitable compensation for survivors of Abuse and reorganizing to enable the Debtor to continue its mission to serve the needs of the faithful within the Diocese of Oakland are the focal points of the Plan," the disclosure statement reads.
The plan's financial structure includes an initial payment of $63 million upon the plan's effective date, followed by annual installments over five years. The diocese intends to secure a $55 million loan from the Roman Catholic Cemeteries of the Diocese of Oakland (RCC) to help fund the initial contribution.
According to the filing, approximately 386 unique, non-duplicative abuse claims were filed before the bar date. Based on the proposed funding, the average distribution per claim could reach approximately $401,449, though actual payments would vary based on a scoring system that accounts for factors including the nature and impact of abuse suffered.
The plan creates three pathways for survivors: an immediate $50,000 payment option; a claims evaluation process with proportional distributions from the trust; or litigation against non-settling insurers with the trust reserving funds based on claim evaluations.
To fund these settlements, the diocese proposes selling significant real estate holdings, including vacant land, portions of church properties, and even entire active church locations.
"The Debtor recognizes the sale of valuable real property, particularly 'full sites' currently used in the Debtor's ministry, is a painful outcome for the Debtor and many Catholics," the disclosure statement acknowledges. "Nonetheless, the Debtor is making this sacrifice voluntarily for the benefit of Survivors in this bankruptcy case."
Notably, the Official Committee of Unsecured Creditors, composed primarily of abuse survivors, opposes the plan. The committee has pursued separate adversary proceedings against the diocese, seeking to substantiate claims that additional non-debtor entities should be consolidated into the bankruptcy estate.
The plan also describes ongoing insurance litigation against various carriers that could potentially increase recoveries for claimants. This litigation has been consolidated before Judge Jacqueline Scott Corley in the U.S. District Court for the Northern District of California (Case No. 3:24-cv-00709-JSC).
The disclosure statement addresses legal complexities arising from the U.S. Supreme Court's June 2024 decision in Harrington v. Purdue Pharma regarding third-party releases. The diocese believes its plan structure, which makes RCWC's contributions contingent on obtaining releases from survivors, complies with the ruling's consent requirements.
The Oakland Diocese is one of more than 30 Catholic dioceses nationwide to seek bankruptcy protection amid sexual abuse claims. The case is pending before the U.S. Bankruptcy Court for the Northern District of California, with Judge William J. Lafferty III presiding.
Foley & Lardner LLP represents the diocese in the bankruptcy proceedings.
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Link to full document: Third Amended Disclosure Statement for Debtor's Third Amended Plan of Reorganization