Bankruptcy 101: Property Sales

It is very common in Diocese bankruptcies to see some church property sold, and the proceeds become part of a financial settlement for Survivors.  At the same time, it’s also common for there to be concern that these sales are completed in a transparent way that will maximize the sale price.  This FAQ is intended to explain the process and ease concerns.  Survivors should always discuss questions related to their individual case with their attorney if represented.  General questions about the bankruptcy process can be directed to the Official Committee of Survivors’ legal counsel Stinson LLP at santarosasurvivorteam@stinson.com  All correspondence receives a reply and is treated confidentially.

Why would the Diocese want to sell its property?

Bankruptcy is an opportunity for the Diocese to reorganize its assets to produce a monetary settlement that Survivors will accept in a plan that they vote upon and the Court approves.  If the Diocese has property that is not critical to its operation in the future it may choose to sell it to generate money that will be a part of a settlement.

Can the Diocese sell property without anyone knowing about it?

NO.  Property sales must conform to bankruptcy rules of transparency and be publicly communicated.

Does the Official Committee have any say in the process?

YES.  The Diocese will share publicly any properties it is selling.  It will then solicit bids, accept one if possible, file a motion to have a sale finalized, and the sale does not occur without Court approval.  The Official Committee may object to any sale that it believes does not maximize value for Survivors.

How does the Official Committee know what the value of a property is?

 The Official Committee retains experts that focus on several areas of bankruptcy.  Real Estate is one of those areas and the Official Committee has retained Stout Risius Ross, LLC to be its trusted Real Estate advisor in the Santa Rosa Diocese bankruptcy.  This firm has a great deal of experience in diocese property valuation and will advise the Committee regarding whether Diocese property is valued and marketed appropriately, and if any bids are within acceptable fair market value.

I saw a property listed and the asking price seemed low.  Why is that?

Valuation of Church property is often not as straightforward as valuing residential housing.  Sometimes the structures on the property are very specialized and can’t easily be used for alternative purposes.  There are also zoning issues and sometimes historic restrictions.  Even when the land is valuable, valuation must take into account the cost of building removal, if possible, and the potentially limited number of buyers willing to engage in such a project.

What happens to the money after the Diocese sells the property?

If all or part of the proceeds are to go to Survivors as part of a financial settlement then the money is placed into escrow where it is held until the bankruptcy is completed.

Can I be sure that nothing illegal or inappropriate is going to happen with the sale of property? 

Absolutely.  Plans to sell property and any Transactions are constantly monitored by the Official Committee’s legal counsel Stinson LLP.  Any transactions the Committee believes will be inappropriate or do not adequately maximize Survivor proceeds will see the Official Committee object in court where the Judge will hear the Committee’s arguments as to why a sale should be prohibited.

Survivors involved with the Archdiocese of New York and Archdiocese of New Orleans have seen important developments recently.  

In New York, the Archdiocese has announced it enter a formal negotiation process with attorneys for Survivors and commit at least $300 million to compensate the 1,300 victims of sexual abuse with claims pending against the church. Additional information may be found here.  

In New Orleans, Survivors and the Archdiocese reached a settlement of $230 million, approved by the bankruptcy court, to address the claims of approximately 600 Survivors who have been a part of this bankruptcy since it was filed in May of 2020. Further information about the New Orleans case can be found here. 

Both of these developments point to the recognition that significant financial settlements are appropriate to address the harm that Survivors have endured during their lifetime.  While every bankruptcy proceeding is unique, these are positive developments for Survivors.  If you have legal representation and questions related to your case, you should direct them to your attorney.  If you have questions about the bankruptcy process in general, you may email Stinson LLP via santarosasurvivorteam@stinson.com.  Every message will receive a response.

On October 27, 2025, the Diocese of Santa Rosa obtained approval from the Bankruptcy Court to sell Our Lady of Mount Carmel Church in Cloverdale, California for $460,000.00. The net proceeds of the sale will be made available for distribution to Survivors according  to the terms of any consensual plan of reorganization approved by the Bankruptcy Court. In the professional opinion of Stout Risius Ross, LLC (the Committee’s real estate valuation expert), this sale price is above the range of reasonable values for the property, so the Committee supported the sale. The Committee continues to review all real estate sales proposed by the Diocese to ensure that the maximum amount will be available to Survivors in a bankruptcy settlement.

The Official Committee of Survivors in the Diocese of Santa Rosa bankruptcy, with the assistance of its legal counsel Stinson LLP, has been diligently involved in all aspects of the bankruptcy and is sharing the update below.  Please understand that we are also involved in mediation with all parties and must maintain strict confidentiality.  This prohibits us from sharing some information until agreements are made public.  However, we will continue to update this website whenever possible.

• Litigation Efforts:  Over the summer the Committee secured two big victories.  First, the court granted the Committee permission to sue two Catholic entities in Washington, D.C. (the United States Conference of Catholic Bishops and Catholic Relief Services) to recover up to $760,000 from those entities for the benefit of Survivors; that lawsuit is ongoing.  Second, the court granted permission for three Survivors’ lawsuits to proceed against the Diocese and its affiliates.  The court also authorized Survivors to send settlement demands to the Diocese.  While the rest of the Survivors’ cases against the Diocese remain paused during the bankruptcy case, we expect that these three cases (along with the settlement demands) will help us move settlement talks forward more quickly.

• Ongoing Mediation:  One of the mediators in this case stepped down due to health concerns, and the court appointed a replacement mediator named Roger Kramer. Mr. Kramer has a strong track record of resolving similar cases.  In collaboration with the new mediator, the Committee is actively engaged with the Diocese, its affiliates, and its insurers to negotiate a global settlement as soon as possible.  Once an agreement is reached, Survivors will have a chance to vote on it and the bankruptcy court will also have to approve it.  Once the settlement is approved by the bankruptcy court, Survivor claims can be reviewed and paid.  

• Positive Developments in Other Cases:  In the bankruptcy of the Diocese of Albany, the court ruled that insurance companies may not object to claims filed in the case.  Also, in the bankruptcy of the Diocese of Syracuse, the bankruptcy court confirmed (approved) a plan of reorganization over the objections of insurers and the U.S. Trustee.  We view both these positive developments as helpful precedents that will limit the ability of third parties, especially insurance companies, to hinder and delay our Committee’s efforts in the Diocese of Santa Rosa’s bankruptcy.

• Survivor Website, Follow-Up Questions, and Resources:  The Survivor Committee created this website to provide information about the Diocese’s bankruptcy throughout the case.   The website provides an overview of the bankruptcy process, answers frequently asked questions, posts periodic case updates, and lists important resources for Survivors in the Santa Rosa area.  If you have any questions about the bankruptcy process or concerns that you would like to send to the Official Committee directly, you can do so by sending an e-mail to santarosasurvivorteam@stinson.com.