Diocese Bankruptcy Plan Approved
By Sabra Stafford
January 13, 2017
The Diocese of Stockton announced this week that a judge has approved their bankruptcy plan, including the establishment of a $15 million trust for survivors of sexual abuse committed by church officials.
On Tuesday a judge from the U.S. Bankruptcy Court for the Eastern District of California approved the Roman Catholic Bishop of Stockton’s consensual Plan of Reorganization. The plan provides $15 million through cash contributions and a promissory note to fund a trust for the exclusive benefit of survivors of clergy sexual abuse; provide non-monetary commitments such as therapy and counseling; payment of at least 50 percent of what is owed to general unsecured creditors; and restructuring of secured loans.
The plan received nearly unanimous approval in voting by the sexual abuse survivors and other creditors, according to the Diocese.
The Roman Catholic Bishop of Stockton filed for Chapter 11 bankruptcy protection in January 2014 after a series of costly sexual abuse settlements left them financially drained. Once the Diocese made the decision to file for bankruptcy they began a notification process that over the course of three months led to 34 new claims of sexual abuse.
The Diocese of Stockton has paid out more than $14 million over the past 20 years to settle sexual abuse claims. The majority of the claims were lodged against defrocked priest Oliver O’Grady, who spent several years at Turlock’s Sacred Heart Church. O’Grady has admitted to sexually abusing at least 25 children of all ages and both sexes, and sleeping with two mothers to gain access to their children.
After admitting to sexually abusing an 11-year-old girl in Lodi, his first assignment, O’Grady was sent to Sacred Heart, where he served from 1978 to 1982.
O’Grady was arrested in 1993 in Calaveras County on multiple sexual abuse charges. He pled guilty to four counts, including the molestation of two Turlock brothers, and was sentenced to 14 years in prison. He served seven years and was then deported back to Ireland in 2000. In 2012, a court in Ireland sentenced him to three years in prison for possession of child pornography.
Part of the settlement funds already paid by the Diocese was for a sexual abuse claim against a priest and a youth coordinator at Sacred Heart. In 2003, the Diocese agreed to pay $1 million to a 19-year-old man who claimed he was sexually abused by a priest at the church when he was 14 years old. The claim accused Oskar Pelaez, who served as a priest at the church from 1995 to 1998, of molestation. Pelaez pled no contest in 2002 to 12 counts of child molestation and was sentenced to three years and four months in prison.
Locally, the Diocese oversees All Saints University Parish, Sacred Heart Church, and Our Lady of the Assumption of the Portuguese Church, all in Turlock, and St. Anthony’s Church in Hughson. It also includes Sacred Heart’s Turlock schools.
The approved consensual Plan will allow the Diocese to exit bankruptcy within the next few weeks. The Diocese with limited financial assets will be able to continue its essential ministries and services to meet the needs of the parishioners and others who rely on the Diocese’s ministry, education, and charitable outreach.
“We wish to thank all of the parties, including the court appointed mediator Judge Gregg W. Zive, Judge [Christopher] Klein, the sexual abuse survivors, the insurers, the creditors’ committee, and their respective counsel, our counsel, and the entire Catholic community, for helping bring this very difficult chapter in the history of the Diocese to an equitable resolution,” said Bishop Stephen Blaire.