‘Not a happy result’: Federal bankruptcy court rejects Diocese of Oakland settlement plan

A federal judge this month rejected a request from the Diocese of Oakland, California, to resolve its ongoing bankruptcy proceedings, arguing that the diocese had not satisfied statutory requirements to do so while dismissing claims that the diocese should be granted a special religious dispensation.

The diocese had proposed a plan earlier in the year to pay more than $200 million into an abuse victims’ fund. A committee of survivors countered with a proposed payout of more than $300 million, which the diocese itself subsequently opposed.

Judge William Lafferty said in an Oct. 2 decision that the diocese had failed to demonstrate that it was undergoing a “substantial burden” on its religious rights in being required to adhere to federal bankruptcy proceedings.

The judge dismissed as “incorrect and impossible” a scenario suggested by the diocese that would result in what Lafferty described as an “apocalyptic forced sale of all churches in the Oakland Diocese” under the federal bankruptcy court.

Such a scheme, Lafferty said, “can never be compelled in the bankruptcy system.”

Lafferty also expressed concern that the diocese’s “liquidation analyses” are “structured in a…