MILWAUKEE (WI)
Crain’s Chicago Business
(Bloomberg) — A federal appeals court said the bankrupt Archdiocese of Milwaukee can’t defend the transfer of $55 million into a cemetery trust by invoking a 1993 religious- freedom statute.
The Milwaukee church filed for reorganization in June 2011 to resolve claims of clergy sexual abuse. The largest single potential asset for victims was the $55 million, which was moved to the cemetery trust before the bankruptcy filing.
An official creditors’ committee representing abuse victims sued to recover the money, saying it was improperly transferred. The bankruptcy judge let the case proceed, but U.S. District Judge Rudolph T. Randa stopped it in July 2013, concluding that the trust was exempted from creditor claims by the 1993 Religious Freedom Restoration Act, or RFRA.
The creditors appealed.
A three-judge panel of the Chicago-based U.S. Court of Appeals handed down a 38-page opinion Monday reinstating the suit. U.S. Circuit Judge Ann Claire Williams, writing for the panel, disagreed with Randa on virtually every point.
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