Judge Rules She Can't OK Archdiocese Reorganization Plan

By Annysa Johnson
Milwaukee Journal Sentinel
June 20, 2014

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U.S. Bankruptcy Judge Susan V. Kelley ruled Friday that she does not have jurisdiction to approve the Archdiocese of Milwaukee's reorganization plan while key questions in a related lawsuit over $60 million it holds in trust for the maintenance of cemeteries are pending before the 7th Circuit Court of Appeals.

The decision is a victory for the creditors committee, which had sought to block approval of the plan until the appellate judges rendered their decision — a process some have said could take a year. And it has forced the cancellation of the October confirmation hearings, at least for now — a setback for the archdiocese.

James Stang, lead attorney for the creditors committee, called Kelley's ruling "an important step in preserving our rights against the cemetery trust while the appeal is pending."

Archdiocese spokesman Jerry Topczewski said the church's attorneys are studying the ruling, but he added: "After nearly four years in bankruptcy, we remain committed to doing what we can to continue to move this proceeding forward."

At issue before the 7th Circuit is whether forcing the archdiocese to put even $1 of the cemetery trust into the bankruptcy estate — and ultimately a settlement for clergy sex abuse survivors — would violate its free exercise of religion under the First Amendment and the 1993 Religious Freedom Restoration Act.