Bankruptcy Judge Susan V. Kelley ruled on 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 Seventh Circuit Court of Appeals, the Milwaukee Journal Sentinel reported today. 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. At issue before the Seventh 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. Judge Kelley ruled earlier that it would not. She was overturned by U.S. District Judge Rudolph T. Randa, who found that cemeteries and their proper care play a central role in the Catholic belief in the resurrection of the body after death. The appellate court also is considering a request by the creditors committee that Randa be barred from hearing any issues related to the cemetery trust because of a conflict of interest.
