By Dietrich Knauth

July 29 (Reuters) - A U.S. bankruptcy judge said Tuesday that he will approve a $246 million settlement between the Roman Catholic Diocese of Rochester in western New York and about 470 victims of child sex abuse who brought legal claims against the 300,000-member diocese.

U.S. Bankruptcy Judge Paul Warren said that the Diocese's bankruptcy plan "is going to be approved" at a Sept. 5 hearing and money would begin going out to victims after that. The settlement was supported by every survivor of sex abuse who voted on it, and it was co-authored by a committee appointed to represent the interests of abuse victims, Warren said.

"The victims did not just have a seat at the table, they had a pen in their hand," Warren said. "I realize it is not going to fix what happened, but hopefully it will help."

Warren did not immediately approve the plan, however, saying he would do so once a recent objection was settled or otherwise resolved.

The Diocese will pay $55 million toward the settlement, with the other funds coming from its insurers. The final insurer settlement was reached last week, when Continental Insurance Co agreed to pay $120 million toward the settlement fund.

Warren overruled all other objections to the plan, including one by the U.S. Department of Justice's bankruptcy watchdog, which had argued that the settlement was not consensual because victims would be bound by its terms unless they filed paperwork to opt out of the deal.

The DOJ watchdog, the Office of the U.S. Trustee, argued that creditors, including abuse victims, should "opt in" to the deal if they wished to accept money and release their legal claims against the Diocese and related entities like Catholic schools and parishes.

Warren said that the unanimous support from abuse claimants, as well as the fact that their attorneys helped draft the bankruptcy plan, meant that the plan was "consensual" even if it used an opt-out structure.

The remaining objection was filed by a religious organization, the Sisters of Saint Joseph of Rochester, which argued that the bankruptcy settlement could impair its legal defenses against potential sex abuse lawsuits in the future. Warren said that he was prepared to overrule that objection if the Sisters of Saint Joseph could not work out an agreement with the Diocese before Sept. 5.

"As far as I'm concerned, we're done, we just need to put a ribbon on the box at this point," Warren told supporters of the settlement who attended the court hearing.

The diocese filed for bankruptcy in 2019 after a New York state law opened the door to new lawsuits based on decades-old sex abuse claims. Following the passage of the Child Victims Act, most of the Catholic dioceses in New York filed for bankruptcy, including those in Albany, Buffalo, Syracuse, Rochester, Rockville Centre and Ogdensburg.

The case is The Diocese of Rochester, U.S. Bankruptcy Court for the Western District of New York, No. 19-20905.

For the Rochester Diocese: Stephen Donato and Camille Hill of Bond, Schoeneck & King

For Continental: Jeff Dove of Barclay Damon; Mark Plevin and Miranda Turner of Plevin & Turner

For the creditors committee: Ilan Scharf and James Stang of Pachulski Stang Ziehl & Jones; Timothy Burns and Jesse Bair of Burns Bair LLP.

Groups of private abuse claimants are represented by law firms including Jeff Anderson & Associates, Law Offices of Mitchell Garabedian, Marsh Law Firm, and PCVA Law.

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(Reporting by Dietrich Knauth)