For the second time in two years, lawyers for the Archdiocese of Milwaukee and sex abuse victims will sit down with a mediator next month in hopes of hammering out a settlement in the archdiocese's nearly 4-year-old bankruptcy.

None of the parties associated with the case would estimate what it would take to resolve the underlying issues, including a pending lawsuit over $60 million in trust set aside for maintenance of the archdiocese's cemeteries.

But two things appear certain: Abuse survivors will undoubtedly push for more than the $3 million-plus they were offered as part of the reorganization plan proposed by the archdiocese in February. And the archdiocese appears reluctant to budge, at least at the outset.

"If anything, our starting position is the (reorganization) plan," said Jerry Topczewski, chief of staff for Archbishop Jerome Listecki. "That's what's on the table, and we think it's a viable plan."

James Stang, lead attorney for the creditors committee, suggested there would have to be some give for the mediation to succeed.

"They want the bankruptcy done with," Stang said of the archdiocese. "It's been hard on the community, it's been hard on the survivors...and they want to move on.

"The question is," he said, "what is the price of moving on consensually?"

The mediation appears to be a last-ditch effort to come up with a negotiated settlement before the U.S. 7th Circuit Court of Appeals issues its ruling on a key question related to the cemetery trust. At issue is whether forcing the archdiocese to tap even $1 of the cemetery trust to fund the bankruptcy estate — and ultimately pay sex abuse settlements — would violate its free exercise of religion.

The archdiocese says it would. The creditors committee — which is composed of abuse victims but represents all creditors — rejects that argument.

A decision favoring the creditors would likely spawn a new round of costly court battles in a case where legal fees have already topped $13million.

It's those fees — and the prospect of more — that have likely pushed the archdiocese to propose the mediation at this stage in the bankruptcy, according to legal experts.

"The thing about Chapter 11 is that it's extraordinarily expensive. And at some point the expenses become the dominant moving force in the case," said Ralph Anzivino, a Marquette University Law professor who specializes in bankruptcy law.

"I think there's pressure on both sides," said Anzivino. "It may be that the creditors side will also soften their position and look for middle ground. That's what happens in these long, embattled cases. Sometimes they lose the stomach for continuing to go on like this."

Insurance, cemetery trust

U.S. Bankruptcy Judge Susan V. Kelley ordered the mediation at the archdiocese's request at a hearing late last month. She appointed her St. Paul, Minn., counterpart, U.S. Bankruptcy Judge Katherine A. Constantine, as mediator.

The parties — including attorneys for the cemetery trust — are scheduled to meet Sept. 8 and 9 in Minnesota.

Kelley also strongly urged the archdiocese's insurance carriers to take part in the mediation. It was not immediately clear whether they plan to do so. Attorneys for three firms — Lloyd's of London, and Stonewall and OneBeacon insurance companies — did not return telephone calls seeking comment. The insurers maintain they are not liable for the abuse incidents because the underlying allegations against the archdiocese involve an intentional act — fraud — rather than accidents.

The archdiocese insists that insurance and the cemetery trust are the only significant assets in play at this point. All others, including the Faith in our Future fund created in 2008 to hold the proceeds of a $105 million capitol campaign, are restricted and off limits.

Creditors dispute that, saying questions about the Faith in Our Future trust and certain other assets deemed restricted have yet to be litigated.

Attorney Timothy Nixon, who represents Archbishop Jerome Listecki as the sole trustee of the cemetery trust, said he has "not yet discussed any specifics with the archbishop" about how far the trust would go to settle the pending litigition.

Under the proposed reorganization plan — which survivors have rejected as inadequate — the trust agreed to loan the archdiocese $2 million, and to contribute $2 million annually toward the cost of its cemeteries. The $2 million loan figure, Nixon said, was based on the archdiocese's access to collateral, ability to repay it and the litigation risk.

Among the questions raised by the judges in the 7th Circuit during its June hearing on the religious liberty issues, was whether the archdiocese needs the full $60 million for the cemeteries. Nixon insists that it does.

"If they want to go back to determine how much is needed, we can go there," he said. "We're prepared to do that."

Financial compensation for victims is just one piece of the mediation puzzle. Myriad other issues would likely be raised, including which of the 575 men and women who've filed sex abuse claims should be compensated; whether the archdiocese's parishes — which are separately incorporated — should get blanket immunity from future lawsuits; and more.

Jeffrey Anderson, who represents most of the sex abuse victims, declined to comment on the mediation, other than to say that the case has "gone wildly out of control."

The archdiocese filed for Chapter 11 bankruptcy protection in January 2011 to address its mounting sex abuse claims. The filing ignited what one court official has called a "scorched-earth" legal battle as lawyers for the archdiocese moved to throw out all of the sex abuse claims, and lawyers for the creditors pursued church assets that could be used to compensate victims.

Each side blames the other for running up legal fees, which, under federal bankruptcy law, must be paid by the debtor, in this case the archdiocese.

The archdiocese proposed a reorganization plan in February that would set aside less than $4 million to compensate 128 victims — cases involving diocesan priests who the archdiocese had reason to believe had histories of abuse. An additional $4.5 million would go to legal fees, and $500,000 to set up a therapy fund for survivors.

The Sept. 8-9 session will be the archdiocese's third attempt at a mediated settlement with sex abuse victims since 2010. The archdiocese offered $4.6 million to a group of about 23survivors in 2010, but victims declined to consider it because, they said, it did not include such non-monetary provisions as the release of church documents. Eighteen months into the bankruptcy,Kelley ordered the parties into mediation in July 2012, but they failed to come to an agreement. Details of their positions were never made public.

Before entering bankruptcy, the archdiocese paid at least $33 million in settlements, therapy, legal fees and other costs associated with the sex abuse crisis, according to its website.