Two weeks before the hearing, a Delaware judge will hear arguments about whether to confirm the BSA’s proposed restructuring plan. The settlement was announced Thursday.
The total compensation fund would exceed $2.6 billion. This would make it the largest single settlement for sexual abuse in American history.
The U.S. bankruptcy trustee appointed the official abuse claimants panel, also known as the tort claimants commission or TCC, to represent all survivors of sexual abuse. The BSA’s plan for compensation of abuse victims has been criticized by the organization. It only represents a fraction (or even all) of the potential liabilities of local Boy Scout councils and insurers.
After weeks of intensive discussions that lasted into Wednesday night, the committee announced it had reached an agreement with the BSA to make “important and positive changes” to its plan. It now recommends that abuse claimants who voted in opposition to it change their votes.
Friday’s case status hearing will be held by Judge Laura Selber Silverstein.
The committee stated that it had achieved three main goals with the revised plan. These included enhancing Boy Scouts’ child protection and independent governance of the settlement fund, which will distribute payments to abuse victims.
Barbara Houser, a former bankruptcy judge in Texas, was nominated as the trustee of the settlement fund. Houser served as lead mediator for Puerto Rico’s bankruptcy. It is not clear if there are any other candidates.
Abuse claimants can also sue local troop sponsoring organisations and insurance companies if they do not settle within one year of the plan’s effective date.
This agreement will likely increase pressure on the remaining plan opponents, which includes certain insurance companies, an ad-hoc committee representing 10 Catholic archdioceses as well as the Catholic Mutual Relief Society of America (a church-affiliated non-profit that insures hundreds of religious orders, dioceses, and institutions).
John Humphrey (co-chair of TCC) stated that the BSA’s inability to secure sufficient support for its plan has forced it and the local councils to return to the negotiation table.
He stated in a statement that “Survivors empowered themselves when voted in sufficient numbers for confirmation of the prior plan.”
Boy Scouts of America, which is based in Irving Texas, applied for bankruptcy protection in February 2020. They sought to stop hundreds of individual lawsuits and establish a fund for those who claim they were sexually abused when children. The organization was already facing 275 lawsuits, but it ended up facing over 82,000 sexual abuse claims.
The Boys Scouts stated Thursday that they support the reorganization plan by adding the official abuse claimants committee.
Abuse claimants voted on the previous plan, with about 73.5% valid ballots in support of the plan. Boy Scouts hoped for at least 75%. The rules for a Chapter 11 case required that the Boy Scouts have approval from two-thirds vote of sexual abuse victims. A higher level of support is likely to be needed, however, as the BSA plan provides liability releases for third parties other than debtors. This includes local BSA councils and insurers.
No matter how much support there is, plan opponents, including a U.S. bankruptcy trustee argue that it can’t be confirmed if third parties other than debtors are released from liability without consenting to holders of abuse claims.
Monday’s court filing by the bankruptcy trustee – who acts as a “watchdog in such cases to assure compliance with the U.S. bankruptcy code – stated that third party releases violate claimants’ due process rights and are not authorized under bankruptcy code.
According to the plan, the Boys Scouts and the 250 councils in their area will contribute $786 million in cash, property and insurance rights to the fund. They would then be exempt from any further liability.
Century Indemnity Co., and The Hartford, are the largest insurance companies in the BSA. They would each contribute $800 million, $787 million, respectively. Other insurers have also agreed to contribute $69 million.
The Church of Jesus Christ of Latter-day Saints (also known as the Mormon Church) is the former largest troop sponsor of the BSA. It has now agreed to contribute $250 Million to the fund for abuse claims. The United Methodist Church has agreed to donate $30 million from congregations affiliated with it.
In exchange for their contributions, the sponsoring organizations would be exempted from any further liability, similar to settling insurers.
