The Catholic Diocese of El Paso is roughly four months into a Chapter 11 case before Judge Christopher G. Bradley in the Western District of Texas, operating on agreed cash-collateral authority while the Diocese and its official committee of unsecured creditors mediate a consensual plan with retired Judge H. Christopher Mott.
The Diocese—a non-profit religious corporation serving approximately 686,000 Catholics across 26,686 square miles of West Texas—filed for relief on March 6, 2026 Voluntary PetitionDkt. 1. The filing was driven by a structural operating deficit—a projected net loss of roughly $(401,718) on about $15.0 million of revenue for fiscal year 2025—and mounting exposure to clergy sexual-abuse litigation, with 12 pending cases that the Diocese contends it could not resolve outside of bankruptcy Declaration of Gregory J. WattersDkt. 5. Approximately 25% of the Diocese's assets are donor-restricted and a further 48% are functionally restricted (including priest retirement funds), constraining the property available for general creditor distribution.
The capital structure is minimal: a single prepetition secured facility—the WestStar Bank term loan of approximately $1.3 million, secured by a first lien on a pledged money-market account. There is no DIP loan; postpetition liquidity rests entirely on agreed cash-collateral use from that account, applied first to monthly interest-only payments to WestStar and then, only after other cash sources are exhausted, to actual and necessary operating expenses under a 13-week budget with 20% line-item and 15% aggregate variance cushions . On June 26, 2026, the Diocese moved to extend that authority retroactively from June 1 through October 31, 2026, on the same terms and with WestStar's consent, in order to fund payroll, ministry and charitable operations, and the ongoing mediation .
Plan progress is now being channeled through court-supervised mediation. Judge Mott was appointed mediator pro bono to facilitate formulation of a consensual plan of reorganization, with an amended appointment order entered June 24, 2026 Amended Order Appointing MediatorDkt. 236. A parallel inter-diocese dispute has surfaced: the Roman Catholic Diocese of Las Cruces moved for relief from the automatic stay or, alternatively, adequate protection, and the parties agreed to continue the hearing to September 2, 2026, with responses due August 19, 2026 Agreed Order Resetting Stay-Relief HearingDkt. 240. The next omnibus hearing before Judge Bradley is scheduled for July 22, 2026 Notice of Omnibus Hearing DatesDkt. 241.
