Bankruptcy Judge Rejects Diocese of Oakland's Chapter 11 Plan

Bankruptcy Judge William J. Lafferty has rejected the Diocese of Oakland's Chapter 11 plan, ruling that the Diocese failed to satisfy the Bankruptcy Code's requirements for confirmation of a plan of reorganization.

Lowenstein Sandler's Bankruptcy & Restructuring Department has served as counsel to the Official Committee of Unsecured Creditors, which is comprised of survivors of sexual abuse, in the Chapter 11 bankruptcy case of the Roman Catholic Bishop of Oakland (California) since its filing in May 2023.

In a decision of monumental importance for nonprofit religious institutions seeking bankruptcy protection, the Court found no basis to apply the Bankruptcy Code differently or more leniently because the Diocese is a religious entity. The court also held that the Debtor's liquidation analysis was done in a way so as to tilt the playing field in the Catholic church's favor.