On July 1, 2025, Fresno, CA-based The Roman Catholic Bishop of Fresno (the “debtor”) filed a chapter 11 bankruptcy case in the Eastern District of California (Judge Lastreto II). The debtor’s primary role is “… to provide resources, spiritual leadership, direction, support, planning, programming, leadership development and other services to 87 Parishes, two Diocesan Catholic high schools … numerous elementary schools and private independent schools [], five cemeteries [] and various other Catholic-based social and community service organizations that operate in the Diocese of Fresno …” The total population of the area the debtor serves is “… more than 3 million people, and the total Catholic population served by [the debtor] is more than 949,000 million people” — an impressive 117x larger than the global population, 🙄.
Of course, as a religious organization, the debtor has no ongoing business income to fund those services, relying, instead, on fees, donations, grants, financial contributions, and similar forms of earnings to finance its spending. For the FY ending June ‘24, that funded gave rise to ~$42.3mm in debtor revenue.
Which brings us to the obvious question: what precipitated the bankruptcy?
Do we really need to tell you?
We all do. Despite the damndest efforts of the Catholic Church, it’s not exactly a state secret.
Historically, the debtor funded compensation for sexual abuse victims and related litigation while maintaining financial viability all on its own. But, for a three-year period starting January ‘20, the California Legislature revived the statute of limitations, so that previously time-barred claims could be filed. And they were.
During the period, ~160 individuals kicked off civil suits against the debtor, 153 of which are pending today. And in the aggregate, the debtor’s “… total exposure …” — which doesn’t include any funded debt — “… is likely to exceed its assets.” Those assets aggregate to about $94mm, including ~$44.5mm in cash and equivalents.
And that’s the sole purpose of the filing: to avoid a race to the courthouse as those assets and insurance proceeds dissipate over time. Per first day declarant and CFO Cynthia Martin, the debtor “ … intends to negotiate a plan of reorganizations as soon as possible which will: (a) provide a process to fully, fairly and expeditiously resolve claims of Abuse survivors; (b) allocate compensation fairly among the legitimate competing interests for such property; and (c) permit the [debtor] to carry on [its] essential ministries and services so the [debtor] can continue to meet the needs of the Non-Debtor Catholic Entities, parishioners, and others who rely on the the [debtor’s] ministry, education, and charitable outreach.”
But unless any of those “Entities, parishioners, and others” have actual claims against the debtor, we’d guess the plaintiffs would prefer those folks head to the back of the line. And, uh, under the circumstances, we can’t say we’d blame them.
The court held a first-day hearing on July 7, 2025, at which all requested relief was granted, at least momentarily. The US trustee objected to the debtor’s cash management motion on account of its ask to waive the Bankruptcy Code’s deposit requirements. The court is going to take that motion back up on July 10, 2025 and otherwise scheduled the second-day hearing for August 14, 2025 at 10:30am PT.
The debtor is represented by McCormick, Barstow, Sheppard, Wayte & Carruth LLP (Hagop Bedoyan, Mart Oller IV, Garrett Leatham, Garrett Wade) as legal counsel and GlassRatner Advisory & Capital Group, LLC (Wayne Weitz).
Company Professionals:
Legal: McCormick, Barstow, Sheppard, Wayte & Carruth LLP (Hagop Bedoyan, Mart Oller IV, Garrett Leatham, Garrett Wade)
Financial Advisor: GlassRatner Advisory & Capital Group, LLC (Wayne Weitz)
Claims Agent: Donlin Recano (Click here for free docket access)