The diocese filed its reorganization plan Monday in U.S. Bankruptcy Court.
$83 million settlement fund proposed
In May 2026, the diocese reached a $45 million settlement to resolve 125 claims of sexual abuse as part of its Chapter 11 bankruptcy reorganization.
Under the reorganization plan, an $83 million settlement fund would be created for clergy abuse survivors so the diocese can emerge from Chapter 11 bankruptcy.
The diocese, all of its parishes, schools and other entities, would contribute $45 million in cash to a survivor trust.
The rest of the money going into the $83 million settlement fund will come from $38 million worth of insurance settlements.
Bishop cites other diocese cases
As part of the reorganization, each of the diocese’s parishes would file for Chapter 11 bankruptcy before a confirmation hearing.
In an August 25 message, Bishop Terry LaValley said, “We are advised it is the only viable and realistic way to obtain comprehensive relief for the entire Catholic Family. This approach has been successful in the Diocese of Rockville Centre and the Archdiocese of New Orleans.”
He said the diocese expected the parishes to be in bankruptcy for approximately 48 hours.
“Cases will remain open for a period of time, but parishes will emerge from bankruptcy quickly. The only claims addressed in these bankruptcies will be abuse claims. All other creditors and vendors will be paid in the ordinary course of business,” he said.
Breakdown of contributions
The diocese’s 85 parishes and its schools would pay $28.6 million, the diocese and other entities would pay $6.47 million, and the diocese would borrow another $10 million to the trust.
“You may ask why the parishes, and other entities should join in the settlement,” LaValley said. “The majority of our parishes (or their predecessors, by way of merger or consolidation) and some entities are named defendants in already-filed abuse cases, placing them at significant risk of direct liability in State Court actions. The litigation costs, settlements or jury awards would far exceed the resources available. By contributing to the survivors Trust, parishes and other entities will have their claims settled under the Plan.”
Survivors committee approves plan
A committee appointed in the bankruptcy case to represent abuse survivors has approved the reorganization plan.
If the bankruptcy court signs off on the plan, payments will be made to at least 125 survivors and the diocese will exit bankruptcy.
“Resolving of abuse claims and coming out of Chapter 11 is at hand. We are hopeful our Plan will be approved in the next few months and that we may be able to move forward with great hope, free from the threat of continued litigation,” LaValley said.