Boy Scout Abuse Victims Ask to File Their Own Plan in Bankruptcy Reorganization

'More than 18 months into the chapter 11 cases, the debtors’ fifth effort at a plan is just as inadequate and flawed as the first four...'

(Associated Press) A committee charged with representing tens of thousands of alleged victims of child sex abuse in the Boy Scouts of America bankruptcy asked the judge on Wednesday to terminate the BSA’s exclusive rights to file a reorganization plan, so that it can file its own.

The committee’s court filing came hours after attorneys for the Boy Scouts filed a fifth version of a proposed bankruptcy plan, which contains settlements the committee describes as “grossly unfair.”

The committee asserted that it is the only party in the case that can propose a plan that treats abuse survivors “fairly and equitably” and not “sell out” or leave them short.

“More than 18 months into the chapter 11 cases, the debtors’ fifth effort at a plan is just as inadequate and flawed as the first four,” the committee’s attorneys wrote.

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The committee, joined by attorneys for several insurance companies, also asked the judge to postpone a key hearing, scheduled for next Tuesday, for at least three weeks to allow parties to review and file objections to the BSA’s new plan.

The hearing was intended for the judge to consider the adequacy of a disclosure statement outlining a reorganization plan the Boy Scouts filed in July. That plan was superseded by the plan filed Tuesday, which includes substantial changes and additions.

“Despite making material modifications to the plan …, the debtors still wish to go forward with the disclosure statement hearing on September 21,” committee attorneys wrote. “This timeline is wholly inappropriate.”

The judge quickly entered an order indicating that the postponement request will be heard next Tuesday at the time originally set aside for the disclosure statement hearing.

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Two of the major changes in the BSA’s new plan are settlement agreements involving one of the organization’s major insurers, The Hartford, and the Church of Jesus Christ of Latter-day Saints, commonly known as the Mormon church.

The Hartford has agreed to pay $787 million into a fund to be established for abuse claimants. The Mormon church, the largest single sponsor of Scout troops before ending its partnership with the BSA early last year, has agreed to contribute $250 million.

In exchange for the payments, both entities would be released from any further liability involving child sex abuse claims filed by men who said they were molested decades ago by scoutmasters and others.

The new plan, for the first time, provides details on proposed cash and property contributions totaling $500 million into the fund from local Boy Scouts councils, which run day-to-day operations for the BSA.

The proposed contributions range from $11,492 in cash by the Rocky Mountain council in Colorado to property valued at more than $13 million from California’s Orange County council. The Rocky Mountain council’s contribution represents a little more than 1% of its listed net assets. Orange County’s contribution represents about 29.5% of its net assets.

The Michigan Crossroads council, which faces the most abuse claims of any council, 1,736, proposes to contribute a little less than $8 million in cash and property, about 18% of its net assets. The Greater New York council, which ranks second with 1,600 abuse claims, would contribute $9 million in cash, or roughly 43% of its net assets.

In return for combined contributions totaling up to $820 million, and the assignment of certain insurance rights into the fund, the local councils and national Boy Scouts organization would be released from further liability for abuse claims.

The official committee believes the local councils have the financial ability to contribute “several multiples” of what they are offering.

“The BSA’s fifth plan includes settlements with local councils that leave them with billions of dollars of cash and property in excess of their current need to fulfill their mission of Scouting,” committee attorneys wrote.

The BSA’s new plan also includes provisions under which churches, civic groups and other sponsors of local Boy Scout troops could be released from liability for sexual abuse claims.

A chartered sponsoring organization could get a full release from liability in exchange for assigning its insurance rights and making a significant cash contribution to the fund. An assignment of insurance rights, without a financial contribution, would result in a limited release from liability. A sponsoring organization could also refuse to participate and keep its insurance rights, but it would receive no protection from future litigation involving abuse claims.

The official committee contends that the chartered organizations are being offered a “get-out-of-jail-free card” in exchange for transferring their interests in the shared-insurance policies that were purchased by the Boy Scouts.

The Boy Scouts, based in Irving, Texas, sought bankruptcy protection in February 2020, bidding to halt hundreds of individual lawsuits and create a fund for thousands of men who say they were sexually abused as children. Although the organization was facing 275 lawsuits at the time, it’s now facing some 82,500 sexual abuse claims in the bankruptcy case.

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