Boy Scouts Sexual Abuse Bankruptcy Settlement

DOVER, Del. (AP) — Two years after seeking Chapter 11 protection amid a flood of child sex abuse lawsuits, the Boy Scouts of America has reached a tentative settlement with an official bankruptcy committee representing more of 80,000 men who say they were molested as children by scout leaders and others.

The settlement announced Thursday comes just two weeks before the start of a hearing in which a Delaware judge will hear arguments about whether to uphold the BSA’s proposed reorganization plan.

In total, the compensation fund would total more than $2.6 billion, which would be the largest comprehensive sexual abuse settlement in US history.

The official Abuse Plaintiffs Panel, known as the Tort Plaintiffs Panel or TCC, was appointed by the US Trustee in Bankruptcy to act and represent the best interests of all sexual abuse survivors. He has long argued that the BSA’s plan to compensate victims of abuse was ‘grossly unfair’, representing only a fraction of the potential liabilities of insurers and local scout councils, and a fraction of what they can. to pay.

But after weeks of intense discussions that lasted late into Wednesday night, the committee announced that it had negotiated “significant and positive changes” to the BSA plan. He is now recommending that abuse claimants who voted against change their votes.

Judge Laura Selber Silverstein will hold a hearing on the status of the case on Friday.

The committee said it had achieved three main goals with the revised plan, including improving child protection measures for scouts and ensuring independent governance of the settlement fund that will distribute payments to claimants. qualifying abuse.

Retired Texas bankruptcy judge Barbara Houser, who served as the lead mediator in the Puerto Rico bankruptcy, was appointed trustee of the settlement fund. We do not know if there are other candidates.

The revised plan also offers abuse plaintiffs the ability to sue insurance companies and local troop-sponsoring organizations, such as churches and civic groups, that fail to reach settlements within a year of the entry into force of the reorganization plan.

The deal is expected to intensify pressure on the plan’s remaining opponents, including some insurance companies and an ad hoc committee representing 10 Catholic dioceses and archdioceses and the Catholic Mutual Relief Society of America, a nonprofit affiliated with the government. church that insures hundreds of dioceses, religious orders and establishments.

John Humphrey, co-chairman of the TCC, said the BSA’s failure to garner sufficient support for its previous plan has forced the organization and local councils back to the negotiating table.

“Survivors were empowered when they voted in sufficient numbers to block confirmation of the previous plan,” he said in a statement.

The Boy Scouts, based in Irving, Texas, filed for bankruptcy protection in February 2020, seeking to end hundreds of individual lawsuits and create a fund for men who say they were sexually abused as children. Although the organization faced 275 lawsuits at the time, it ended up facing more than 82,000 sexual abuse complaints in the bankruptcy case.

In a statement Thursday, the Boy Scouts said that with the addition of the official abuse seekers committee, “all significant constituencies of survivors” support the reorganization plan.

Voting by abuse claimants on the previous plan showed that about 73.5% of the 53,596 valid ballots supported the plan. The Boy Scouts were hoping for at least 75%. Under the rules of a typical Chapter 11 case, the scouts needed the approval of two-thirds of the sex abuse claimants who voted. However, since the BSA plan includes liability waivers for non-debtor third parties, including local BSA councils, insurers and troop sponsoring organizations that contribute to the casualties fund, a higher level of support will probably be needed.

Regardless of the level of support, opponents of the plan, including the U.S. Bankruptcy Trustee, argue that it cannot be confirmed whether non-debtor third parties are released from liability without the consent of abuse claim holders.

In a court filing on Monday, the bankruptcy trustee, who acts as a “watchdog” in such cases to ensure compliance with the US bankruptcy code, argued that third-party releases violate the rights of a plaintiffs due process and are not permitted under bankruptcy law. coded.

The reorganization plan calls for the Boy Scouts and its approximately 250 local councils to contribute up to $786 million in cash and property, and to assign certain insurance rights to the fund. In exchange, they would be relieved of any further liability.

The BSA’s two largest insurers, Century Indemnity Co. 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, commonly known as the Mormon Church, has agreed to contribute $250 million to the fund for abuse complaints involving the church. Congregations affiliated with The United Methodist Church have agreed to contribute $30 million.

Sponsoring organizations, like settlement insurers, would be released from liability in return for their contributions.

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