Telling attorneys for both the creditors and the Archdiocese of Milwaukee that she remains “committed to my belief that this is the way to get this done” – referring to resolution of the latter’s Chapter 11 bankruptcy reorganization, on July 30, Judge Susan V. Kelley of the U.S. Bankruptcy Court for the Eastern District of Wisconsin, granted a motion by the archdiocese’s attorneys to “appoint a mediator and order the parties to mediation.”
On Aug. 6, Kelley appointed Judge Katherine A. Constantine, bankruptcy judge of the District of Minnesota, as case mediator. Among participants in the mediation will be attorneys for the archdiocese, the creditors’ committee, and the Archdiocese of Milwaukee Catholic Cemetery Perpetual Care Trust, Jeff Anderson and Associates in its capacity as personal counsel to members of the creditors’ committee, and “any additional entities or persons that with Judge Constantine’s consent choose to participate in the mediation,” according to Kelley’s appointment order.
Kelley’s order also stated, “The debtor’s insurance carriers are strongly urged to participate, in order to attempt to achieve the most efficient settlement of the issues remaining in this case.”
The mediation will take place Sept. 8 and 9 in Minneapolis.
“The point of this is to move the case along,” she said. “The point of this is to try to negotiate a resolution quickly and stop the legal fees. And bring the case to resolution.”
During the 40-minute discussion, Kelley said, “I’m trying to do what will make it as likely as possible, knowing that I’m cynical, because I was burned the last time by sending this thing into mediation. This time, if we’re going to do it, I want to give it the best chance of succeeding.”
She was referring to her 2012 attempt to have retired U.S. Bankruptcy Court Judge Randall Newsome mediate the case. Proceedings in the reorganization were stayed from July 20 through Sept. 20 in hopes that the case could be settled. Due to the parties’ agreement that mediation sessions would be confidential, details as to why resolution was not reached were not revealed.
Between Oct. 18 and Nov. 11, 2010, the archdiocese attempted to mediate with 24 victim/survivors, offering a settlement of $4.6 million. Attorneys for the victim/survivors rejected the offer, and the archdiocese filed for reorganization on Jan. 4, 2011.
Daryl Diesing, counsel for the archdiocese, responding to Kenneth Brown, an attorney for the creditors’ committee, regarding what the latter termed “legal impediments” to settle the case, said, “When you get right down to where this case is at, and we said it more than a year ago, it’s whether or not we can settle the Cemetery Trust Litigation. All these other issues are really smokescreens about trying to stop a plan that we think is very confirmable on its face.”
The Cemetery Trust Litigation centers upon whether or not $50 million held in trust for the perpetual care of Milwaukee Archdiocesan cemeteries could be used to settle bankruptcy debts.
The archdiocese has maintained throughout Chapter 11 proceedings that the Cemetery Perpetual Care Trust was separate from the archdiocese. Being a trust, the money has been used solely for the purpose designated – the perpetual care of Catholic cemeteries, stipulated in church law.
On Aug. 1, 2013, in accordance with a July 29, 2013 ruling by U.S. District Court Judge Rudolph T. Randa, that, in effect, said the trust money could not be used to settle bankruptcy debts, the district bankruptcy court dismissed the Cemetery Trust Litigation. On Aug. 25, 2013, the creditors’ committee appealed to the Seventh Circuit Court of Appeals, where oral arguments were heard on June 2, 2014, and where the matter remains.
“We can answer all of these arguments, but the bottom line is that we need somebody to knock some heads together to get to a rational settlement and to talk rationally about what money might be available and how we might allocate it,” Diesing told the court.