Judge overseeing church bankruptcy orders mediation

News conference
Archbishop John Nienstedt, at podium, speaks during a Jan. 16 news conference about the Archdiocese of St. Paul and Minneapolis filing for bankruptcy protection.
Jeffrey Thompson / MPR News

Updated: 7:30 a.m. Jan. 21 | Posted: 6:06 p.m. Jan. 20

The federal judge overseeing the bankruptcy of the Archdiocese of St. Paul and Minneapolis has ordered all parties into mediation.

U.S. Bankruptcy Judge Robert Kressel expressed concern about the length and cost of other church bankruptcies. He is starting off this case with mediation to encourage a relatively quick and inexpensive settlement.

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"I'd like to get this done, get a system in place for compensating victims that's fair," he said.

The archdiocese filed for bankruptcy on Friday, saying it could not afford potential monetary awards to abuse victims.

Archdiocese officials said they were pleased by the mediation order, as was attorney Jeffrey Anderson, an attorney who represents sex abuse victims. He said judges typically order mediation only later in a bankruptcy, after legal bills mount.

"Here he ordered it right away, which means all those administrative costs and bankruptcy lawyers' attorneys' fees don't have to be expended," Anderson said.

Mediation could take weeks or months and may or may not work.

Legal experts say mediation in bankruptcy isn't that unusual. It's been part of most, if not all, church bankruptcies.

Christopher Soper, a bankruptcy attorney and University of Minnesota law professor, said mediation allows for more confidentiality. The victims and the church could reach a settlement without having to disclose as much information as they would during the normal bankruptcy process.

"Here, I think it's a good indication that at least victims and the archdiocese are looking for consensual resolution. We'll have to see whether the insurers will also be on board with that," he said.

Insurers have contested archdiocese claims related to sex abuse, arguing that at least in some cases there's no coverage or the coverage was voided when church leaders identified sexually abusive clergy but let them continue to victimize people.

Anderson and the Twin Cities archdiocese seem fairly amicable of late, as they discuss how to compensate victims.

University of St. Thomas law professor Charles Reid said that improved relationship had to figure in the judge's mediation order.

"I'm not that surprised. You seem to have, at least with Jeff Anderson and with the archdiocese, you have two parties willing to reach an agreement," he said. "And both parties expressed that last week. They said they want to do something quickly, they wanted to do something that's fair."