Boy Scouts bankruptcy judge faces thorny issues in ruling | News, Sports, Jobs


This May 21, 2014, photo shows merit badges and a rainbow-colored neckerchief on a Boy Scout uniform outside Amazon headquarters in Seattle. A Delaware judge faces a host of controversial and complex questions as she debates whether to approve the Boy Scouts of America’s bankruptcy reorganization plan. The BSA filed for bankruptcy protection more than two years ago to avert a flood of lawsuits alleging child sexual abuse by Scout leaders and volunteers.

DOVER, Del. (AP) — More than two years after the Boy Scouts of America filed for bankruptcy protection to avoid a flood of lawsuits alleging child sexual abuse by Scout leaders and volunteers, a Delaware judge is assessing whether the BSA reorganization plan should be confirmed.

After a three-week hearing and nearly a week of pleadings, the judge is expected to rule in the coming weeks. The issues facing Judge Laurie Selber Silverstein are controversial and complex. Regardless of how she rules, the case will head to federal district court, with appeals likely to follow. Here is a brief overview of bankruptcy cases.


The reorganization plan calls for the BSA and its 250 local councils, along with insurance companies and troop-sponsoring organizations, to contribute some $2.6 billion in cash and property to a fund for victims of abuse.

In exchange for these contributions, these entities would be released from further liability, meaning they could not be sued for allegations of Scout-related abuse. But the plan allows abuse plaintiffs to sue insurance companies and local troop-sponsoring organizations that don’t reach their own settlements within a year.

The settlement trust would be overseen by Barbara Houser, a retired Texas bankruptcy judge who served as lead mediator in the Puerto Rico bankruptcy. She would be assisted by retired federal judges Diane Welch and Michael Reagan, who would act as claims administrators. Houser would be required to consult with a 7-member advisory board made up of attorneys representing abuse plaintiffs.


When it filed for bankruptcy, the BSA was facing about 275 lawsuits and was aware of about 1,400 other pending claims, but more than 82,200 abuse claims are in bankruptcy court.

Lawyers for BSA insurers, including those who have since reached settlements and now support the plan, said the huge volume of claims is an indication of fraud and the result of aggressive customer solicitation by lawyers and aggregators for-profit claims. of 82,000 abuse plaintiffs in the case, only 56,536 voted on the plan, 86% of whom voted to accept it.



The Boy Scouts of America is contributing less than 10% of the proposed settlement fund, offering property valued at approximately $80 million, an $80 million promissory note and approximately $20 million in cash.

The 250 local BSA councils, which manage day-to-day troop operations, would contribute at least $515 million in cash and assets, and an interest-bearing note of at least $100 million.

The BSA’s two largest insurers, Century Indemnity and The Hartford, would contribute $800 million and $787 million respectively. Other insurers have agreed to pay about $69 million. The BSA’s former biggest troop sponsor, The Church of Jesus Christ of Latter-day Saints, is reportedly contributing $250 million for abuse claims involving the Mormon church. Congregations affiliated with The United Methodist Church would contribute $30 million.



One of the major problems with the bankruptcy was the treatment of local troop-sponsoring organizations, known as “chartered organizations” and their rights under the BSA insurance policies. These organizations, which number in the tens of thousands, include religious entities, civic associations and community groups.

Under the plan, virtually all Roman Catholic entities in the country, including parishes, schools and dioceses, would be cleared of all liability for all Scouting-related abuse claims from 1976 to the present. They would also be protected against all pre-1976 claims covered by BSA settlement insurers and given 12 months to negotiate financial contributions to the settlement fund in exchange for a full discharge.

In exchange, the Catholic entities would waive their insurance rights and agree to work with the Boy Scouts until at least 2036 to improve and sustain Scouting and increase enrollment. A similar supporting provision was included in the United Methodist Settlement. These provisions could prove essential for the Boy Scouts after decades of steadily declining membership.


While some BSA insurers have negotiated settlements for a fraction of the billions of dollars in liability exposure they could face, other insurance companies continue to challenge the plan. They argue that the fund distribution procedures violate their rights and would result in grossly inflated payouts of abuse claims, including tens of thousands otherwise barred by the passage of time. Opposing insurers also say the findings plan supporters want the judge to make would bind them and make it difficult to challenge claims decisions. In an email, a lawyer for abuse plaintiffs described these burdensome trust distribution procedures as a “Holy Grail” that mass tort attorneys have been pursuing for years. Insurers say the judge’s approval would set a dangerous precedent that tort attorneys would use to their advantage in future lawsuits.



Perhaps the most contentious, and legally complicated, issue in bankruptcy is whether third parties, including insurers, local BSA boards and troop sponsors, should be allowed to escape. to any future liability by contributing to the victims’ fund, or at least not oppose the plan.

Some survivors argue that releasing their claims against nondebtor third parties without their consent violates their due process rights. The American bankruptcy trustee, the government “watch dog” in Chapter 11 bankruptcies, argues that such discharges are not permitted under the bankruptcy code.

Today’s breaking news and more to your inbox


Comments are closed.