The court also found that U.S. District Judge Rudolph Randa, who ruled in the archdiocese's favor, should have stepped aside because of a conflict of interest.
All three Habitat for Humanity homes in honor of Francis were funded by the same anonymous donor with a seed donation of approximately $50,000 each.
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Archbishop Jerome Listecki said it's up to the survivors of sexual abuse to give him a counterproposal to the $4 million he offered for compensation of some victims.
There are still major hurdles before the Milwaukee archdiocese's bankruptcy plan is presented for a vote by claimants, of whom 575 are survivors of sexual abuse.
The claimants' lawyers also asked the bankruptcy judge not to rule on the plan until an appeals court rules on the status of a hotly contested cemetery fund.
The Milwaukee archdiocese will walk away from bankruptcy relatively unscathed if its proposed reorganization plan is accepted by Judge Susan V. Kelley.
A bevy of appeals of decisions in the bankruptcy case as well as other federal and state lawsuits indicate the plan will not be the last word, however.