After a longstanding impasse in the Diocese of Oakland’s bankruptcy proceedings, a federal judge was expected to dismiss the case Wednesday morning – sending roughly 350 child sexual abuse lawsuits back to state court – but agreed to give the parties two more weeks to find a possible path forward.
The request for more time came from attorneys representing the Diocese, along with its insurers and case mediators, who said they’ve had substantive talks in recent days and believe there’s been significant progress made towards a successful reorganization plan.
“This has probably been the most difficult mediation that I’ve been involved in over the past 30 years,” said former bankruptcy judge Randall Newsome, a mediator in the case. “Over the last 10 days, there has been progress like I haven’t seen before.”
Attorneys representing the Diocese’s creditors – mostly alleged child sexual abuse survivors currently suing the church – requested Judge William Lafferty move forward with dismissing the case, saying they’ve been excluded from recent talks between the Diocese, insurers, and mediators.
“Nothing we’ve heard leads us to conclude we’re any closer [to a resolution],” said Jeffrey Prol, an attorney representing the creditors’ committee in the bankruptcy proceedings.
Judge Lafferty, however, agreed to hold off dismissing the case for another two weeks, saying it would be a “tragedy” for the case to be tossed out after so much time, money and effort had been expended over the past two-and-a-half years. He indicated the deadline would not be extended further.
“The Diocese of Oakland welcomes the court’s decision to grant the mediators’ request for two more weeks to try to reach a deal,” a spokesperson for the Diocese said in a statement. “We remain committed to work in good faith toward a settlement that is fair to both the survivors and the 500,000 faithful Catholics in our diocese.”
While granting the request for more time, Lafferty asserted it was critical for any negotiations to include the creditors’ committee and survivors.
“Including the committee in this is of the highest importance,” Lafferty said in court. “You need to respect where they’re coming from and who they represent.”
Victim advocates echoed Lafferty’s sentiments.
“This is about people finding closure,” said Dan McNevin, a local leader with the Survivors Network for those Abused by Priests (SNAP) and a childhood victim of clergy sexual abuse himself. “I think part of finding closure is being engaged in the process, so their voices are heard.”
More than $40 million has been spent by the Diocese on legal fees, according to recent court filings. The Diocese has stated it is running out of money to continue pursuing a resolution through the bankruptcy process without an end in sight.
In September, attorneys for the Diocese filed a motion to dismiss the case, stating it “can no longer afford the administrative expense” of resolving the hundreds of lawsuits it’s facing through the bankruptcy process and that “there are no likely prospects for a global, consensual resolution.”
They said the Diocese’s latest and best offer, which includes $165 million for victims and enhanced child protection protocols, was soundly rejected by alleged abuse victims.
In recent weeks, however, the Diocese has requested more time to pursue a new reorganization plan, indicating positive talks in mediation.
The exact details from those discussions with mediators are considered confidential and were not discussed in court.