The Court Flatly Rejected the Diocese Debtor’s Arguments and Facts and Found

1. No Special Treatment Because They Are a Church: The Court found no basis to apply the Code “differently or more leniently” because the Debtor is a religious entity.  It said fairness requires “that this Debtor comply fully with the requirements of the Bankruptcy Code.”  Its sharpest line:  the ability to retain assets “doesn’t make it a religious entity worthy of special protections, it makes it a debtor.”
2. Mischaracterizing and Misleading: The Court said the Debtor “is misstating the requirements of Section 1129(a)(7) and mischaracterizing the effect of those requirements on Debtor’s religious rights.”  Nothing in that section requires the Debtor to sell any assets, “let alone all or even most.”  It called the Debtor’s concerns about forced sales “misplaced.”
3. The Diocese Exaggerated the Consequences of Funding a Plan and Selling Assets: The Court said the Debtor “continues to assert an incorrect and impossible scenario … an apocalyptic forced sale of all churches … that can never be compelled in the bankruptcy system.”
4. The Debtor Is Hiding & Undervaluing Assets: The Debtor’s reading would ensure “that the Plan ‘wins’ every time.”  The Court also said the Debtor “does not advance any cogent argument to limit the assets available.”
5. Evidence Suggests the Bishop’s Effort to Game the System Through Its Liquidation Analysis: The Court flagged the “curious fact” that both liquidation analyses reach the same recovery figure.  One included only twelve properties, and the other included the entire real estate portfolio.  The Court called this an “extraordinary result” for which the Debtor “offers no plausible explanation.”  It did say the result was probably inadvertent and that the Debtor likely “did not intend so to ‘game’ the system.”
6. Tilting the Playing Field: The Diocese Never Valued the Abuse Claims and Simply Plugged in $172 Million Arbitrarily: The Debtor never valued the Abuse Claims. It simply plugged in $172.3 million, which “does dictate that the Plan will satisfy the test in every instance.”
7. No Support for Property Values; Cemetery Properties Were Given a Zero Value Despite a $47 Million Value: The Court found it “unusual” that the Debtor relied only on Hilco and gave the Cemetery Properties a $0 value, despite a 2022 appraisal of about $47 million. The $20 million RCC deficiency claim rested on “a proposition with no support whatsoever.”  Net result: “a $20 Million error on the debt side of the ledger.”
8. Misstated the Value of the Plan, Stating It Was $172.3 Million When the Correct Figure Was $142.3 Million: The Debtor said unused RCWC funds would stay in the Trust for all Abuse Claimants.  The Court found that “the Plan does not so provide,” and Dr. Currier’s testimony “contradicted the Debtor’s assertions on this point.”  The correct Plan figure is “$142.3 Million, not $172.3 Million.”
9. Bishops Can’t Unilaterally Decide What Assets Are Available or What to Pay: The Court called it “additionally frustrating and unhelpful” that the Debtor treated even asking these questions as an intrusion on religious freedom.  It rejected that position because cramdown “demand[s] full transparency and accountability.”  It added that “a debtor in bankruptcy is not permitted to choose which confirmation requirements it will satisfy.”
10. Flawed Comparisons to Other Settlements That Were Confirmed Consensually: The Court said “that thesis [comparing recoveries in this case to others] is flawed” because every comparison case was confirmed consensually. It also noted the Debtor’s benchmark was surpassed during trial:  the Archdiocese of San Francisco reportedly agreed to economics paying almost half again as much per claimant.
11. Ignored the Benchmark Settlement Reached During Trial in the Archdiocese of San Francisco in an Attempt to Pay Half as Much per Claimant as Was Paid in San Francisco: It also noted the Debtor’s benchmark was surpassed during trial:  the Archdiocese of San Francisco reportedly agreed to economics paying almost half again as much per claimant.