California diocese files for bankruptcy to help reconcile with abuse survivors

(OSV News) -- The Diocese of Fresno, California, has finally filed for bankruptcy -- a year after first announcing its intention to do so -- in order to address more than 150 abuse claims filed under a California lookback law and create a genuine path of reconciliation for the church and abuse survivors.

"I am clear-sighted that this path is the only path that will allow us to handle claims of sexual abuse with fair, equitable compassion while simultaneously ensuring the continuation of ministry within our Diocese," wrote Bishop Joseph V. Brennan in "Addressing the Grievous Fault of Clergy Abuse," a July 1 letter to faithful that was posted in both English and Spanish to the diocese's website.

In a May 2024 letter to faithful, titled "Addressing the Suffering Inflicted by Clergy Abuse," Bishop Brennan had announced plans for the bankruptcy, stating at the time he anticipated filing in August 2024.

In the Chapter 11 petition -- filed July 1 in U.S. Bankruptcy Court for the Eastern District Court of California, Fresno Division -- diocesan chief financial officer Cynthia Martin said that the "volume of lawsuits" puts the diocese "in immediate, dire financial distress," with the diocese's "total exposure ... likely to exceed its assets."

The diocese noted in its filing that California's AB 218 legislation, which was enacted in October 2019 and which opened a three-year window from 2020 to 2022 for seeking redress of previously time-bound claims, had resulted in some 160 claims naming the diocese as a defendant. While 7 of the cases were settled through mediation, about 153 remained pending.

Previously, the diocese had been able to settle claims through its own resources. In its filing, the diocese said it had been able to reach "a global settlement" in the less than 25 claims filed under California's 2002 lookback law. In 2019, the diocese established an independent compensation program it established with five other California dioceses, and paid out $1.03 million in resolving 11 claims lodged with the program.

On its website, the diocese -- which is structured as a California corporation sole, enabling the bishop to administer the diocese under civil law -- is "the only entity filing for Chapter 11."

The diocese's parishes are unincorporated associations under California law, while all but seven diocesan schools are owned by a separate nonprofit corporation, the diocese said on its website. As a result, it explained "the expectation is that the parishes, the school corporation and Catholic Charities would be largely unaffected" by the bankruptcy filing.

In a separate July 1 letter, provided in both English and Spanish, Bishop Brennan described the implications of the bankruptcy on the diocese's cemeteries, of which there are at least five.

While the cemeteries are owned and operated by the diocese, "regardless of the Chapter 11 filing, the Diocese of Fresno will continue to own its cemeteries and fulfill its obligations to the Faithful under the terms of both its paid-in-full and financed pre-need contracts," wrote Bishop Brennan.

Although the contracts are included in the bankruptcy schedules, the diocese plans to file a motion to assume them, and expects no objection, he said.

"Throughout the Chapter 11 proceeding, Catholic funerals and burials will continue uninterrupted as if no bankruptcy had been filed," Bishop Brennan said in his letter, asking clients to continue their contractual cemetery payments.

In his July 1 letter on the Chapter 11 proceedings as a whole, Bishop Brennan described the process as "a journey of conversion through contrition and acknowledgment of the victims' suffering."

"Our Church must address the suffering that victims of clergy sexual abuse endure," the bishop wrote.

Evoking Psalm 51:5, also known as the "Miserere," he said, "We know the sin; it will always be before us."

The bishop added, "Now that we have entered a journey of conversion through contrition and acknowledgement of the victims' suffering, we must enter a path of reconciliation which includes resolving the victims' claims."

He assured faithful of ongoing safe environment efforts, pledging, "I will continue to confront allegations of abuse or any wrongdoing with diligence and care."

"Please pray for the victims of abuse as we journey through this reconciliation process," he said.

The U.S. Catholic bishops’ latest annual report on child and youth protection, issued June 6, shows abuse allegations continue to decline -- but authors warned of the dangers of complacency among dioceses and the laity in upholding key aspects of bishops’ safe environment protocols.

In particular, said the report, lack of functioning diocesan review boards to review protocols and allegations, along with an increase in parents opting their children out of safe environment training, could erode progress in addressing and preventing abuse.

OSV News previously found that as of late 2024, the total payouts of U.S. Catholic dioceses for abuse claims since 2004 had exceeded $5 billion.