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.

By Doug Kennedy

The question we get the most from Survivors who find themselves pulled into a bankruptcy is either “How long is this going to take?” or after a while, “When will this be over?”  For many Survivors, after decades of dealing with the impact of their abuse, these are understandable questions because bankruptcy often represents the first time their abuse has been recognized by others and some degree of resolution is a possibility.  I remember well asking the same questions.  I had just been appointed to the “Official Committee of Survivors” in an organization’s bankruptcy and turned to the Survivor next to me to ask how long he thought things would take.  His answer was “I’m guessing two years.  There’s a lot to be settled.”  I remember thinking “Two years?  Let’s all get in a room, negotiate, and get this done.”  We were both wrong!  It took five years, and appeals are now dragging it out longer.  So, while no one can accurately predict how long a bankruptcy will take, it’s important for Survivors to understand what’s involved so their expectations can be realistic.

Bankruptcy is initiated by a Diocese voluntarily to “reorganize” its debts, pay those it owes what it can, and then continue to operate under the terms of a bankruptcy plan approved by the Court.  To do that, bankruptcy must include complex agreements with creditors (including Survivors) and often many insurance companies that issued policies to the Diocese.  This involves the discovery process and often multiple mediation sessions spanning a great deal of time.  Unfortunately, mediation follows strict confidentiality rules that prevent the parties from sharing very much information.  So, it can often seem like nothing is happening when in fact a great deal of negotiation is taking place.  It’s important to know though that the Official Committee of Survivors is engaged in all facets and along with its legal professionals is working hard to resolve the bankruptcy.  Unfortunately, because of the complexity involved it just takes a lot of time.

Perhaps the best expectation of how long a Diocese bankruptcy might take comes from looking at other cases.  Since 2004 there have been 36 Diocese bankruptcies either settled or ongoing.  The average length of time that they lasted, or continue to be ongoing is between three and five years (our numbers include 21 cases that are ongoing so that average number of months may actually increase when they are settled). 

As my own bankruptcy went on, there were moments of hope that a resolution was near, and many more moments when I realized that it wasn’t.  It was hard not to be disappointed and wonder if it would ever end, and when it did, if the result would be worth the wait.  Being a Survivor is a very long and often very bumpy road.  It’s important that your expectations for this phase of the journey are realistic.  So, I hope this message helps your thinking.  I got tired of telling my family “I don’t know what’s going to happen.” 

There were many days when the most positive thing I could think was “Well, another day, but one more day closer to this being over.”  Please take care of your mental health so you can weather those periods when resolution seems far off or unknown, keep in contact with your attorney, check your Official Committee’s website, and remember that your Official Committee and its legal professionals are laser-focused on all that needs to be accomplished to bring an end to the bankruptcy.  If you have a question at any time regarding the bankruptcy process just email santarosasurvivorteam@stinson.com.  Every Survivor’s message is important and will receive a reply.  Stay strong.