The Archdiocese of Milwaukee will emerge from bankruptcy, after a federal judge approved a plan that includes a $21 million settlement for victims of sexual abuse committed by priests.

The plan, negotiated over several years, will provide $21 million for 355 people who filed complaints of sexual abuse and establish a $500,000 fund for counselling.

US Bankruptcy Court Judge Susan Kelley approved the church's Chapter 11 reorganization plan more than four years after the archdiocese filed for bankruptcy protection.

The US Catholic Church has been hit with a series of sexual abuse accusations aimed mainly at clergy who targeted youths over the past two decades. The scandals have cost the Church about $3 billion in settlements and driven prominent dioceses like Milwaukee into bankruptcy.

The archdiocese filed for Chapter 11 bankruptcy protection in 2011, citing the financial drain of settling sexual abuse claims and acknowledging missteps by the Church in dealing with paedophile priests.

Archbishop Jerome Listecki apologized to the victims in court before the judge approved the plan.

"There's no resolution that would ever give them back what they have lost and what their families have suffered," he said.

"No amount of money can ever restore what was taken from abuse survivors.

"In some way, we hope that we are turning a corner on a terrible part of our history and embarking on a new road lined with hope, forgiveness and love. This era of our past will live on, but we also look forward to the future as a better church. And we are a better church because of the courage of those who have come forward."

The archdiocese in July 2014 released hundreds of documents showing that Milwaukee church officials shielded paedophile priests and protected church funds from lawsuits during a decades-long sex abuse scandal.

Several victims attended the hearing and murmured in displeasure when Listecki and attorneys for the archdiocese spoke.

"I believe in God. I believe in a higher being, but this church should not come out of bankruptcy in my opinion. This is not the church that Jesus started," said one of the several victims who spoke during the hearing.

Additional reporting by Reuters