Diocese of Oakland files bankruptcy to address 330-plus lawsuits

By Sarah Lizee

Olympia, Wash., May 8 – The Roman Catholic Bishop of Oakland, known as the Diocese of Oakland, filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Northern District of California, according to a press release.

The diocese said the filing is necessary considering the more than 330 lawsuits alleging child sexual abuse brought against it under a recent California statute that allowed decades-old claims otherwise time barred and expired to be filed.

All Catholic schools that operate in the diocese are part of separate legal entities and therefore not included in the filing. They will continue to operate as normal.

“The mission and ministries of RCBO also will continue during the restructuring process and beyond,” the diocese said in the release.

Employees will be paid as usual, and their benefit programs will continue uninterrupted. Vendors will be paid for all goods and services delivered after the filing.

Most of the claims brought under the most recent California statute stem from allegations of sexual abuse that occurred in the 1960s, 70s, and 80s by priests who are no longer active in ministry and/or deceased, the diocese said.

“After careful consideration of the various alternatives for providing just compensation to innocent people who were harmed, we believe this process is the best way to ensure a fair and equitable outcome for survivors,” bishop Michael C. Barber said.

“It will also allow RCBO to stabilize its finances and continue the sacred mission entrusted to us by Christ and the Church.

“Given our current financial resources, RCBO could not shoulder the burden of litigating 330 cases filed under the recent California Assembly Bill 218.”

The diocese noted that its Oakland Mass attendance dropped 42% in 2021 from 2019 due to the pandemic and was off 46% from the five-year average.

To align the needs of the ministries, parishioners and priests with the financial realities, Barber in March 2021 appointed a task force comprised of laity and clergy called the Mission Alignment Process Commission to make recommendations for addressing these challenges.

Their efforts are ongoing and expected to take several years to implement but have already resulted in a recent merger of parishes.

This is the second time California has allowed time barred or expired cases of child sexual abuse to be filed by alleged survivors. In 2003, California created a similar window. At that time, RCBO resolved the 52 lawsuits filed against it using insurance funds, selling property, and securing loans.

In its petition, the diocese reported 200 to 999 creditors, $100 million to $500 million in assets and $100 million to $500 million in liabilities.

Foley & Lardner LLP is general bankruptcy counsel. Alvarez & Marsal North America, LLC is financial adviser.

The first meeting of creditors is scheduled for June 12.

The diocese filed Chapter 11 bankruptcy under case number 23-40523.

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