Diocese of Sacramento files Chapter 11 bankruptcy in wake of lawsuits

By Sarah Lizee

Olympia, Wash., April 1 – The Diocese of Sacramento filed for Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Eastern District of California.

The diocese said in a statement that the filing comes as it faces more than 250 lawsuits alleging sexual abuse of minors by clergy and other employees reaching back to the 1950’s.

“This wave of new claims followed a 2019 law allowing victim-survivors to file lawsuits regardless of when the abuse occurred,” the diocese said in the statement.

The diocese said the bankruptcy filing is the best way left to provide some compensation to victim-survivors of abuse.

The bankruptcy court will oversee the distribution of available assets to satisfy claims against the diocese. Victim-survivors of clergy sexual abuse will be represented in the court-supervised proceeding.

A fund will be established to be distributed to victim-survivors as equitably as possible, the diocese said.

“Without this process, it is likely that diocesan funds would be exhausted by the first cases to proceed to trial, leaving nothing for the many other victim-survivors still waiting for their day in court,” the diocese said.

In its petition, the debtor reported $100 million to $500 million in assets and $100 million to $500 million in liabilities.

The diocese is represented in its case by Felderstein Fitzgerald Willoughby Pascuzzi & Rios LLP and Sheppard, Mullin, Richter & Hampton LLP. B. Riley Advisory Services is its financial adviser.

The Sacramento, Calif.-based diocese filed bankruptcy under Chapter 11 case number 24-21326.

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