Boy Scouts Chapter 11 Plan Upheld Appeal

A federal judge backed the Boy Scouts of America’s Chapter 11 plan to settle sex-abuse lawsuits that sent the youth group to bankruptcy, bringing it closer to ending more than three years of court protection. 

Delaware Federal Judge Richard Andrews upheld the Chapter 11 plan of the Boy Scouts of America (BSA) on March 28, saying he found no fault with the bankruptcy court’s conclusion approving the plan, clearing an important hurdle in the legal challenge. However, non-settling insurance companies and attorneys representing the victims believe the reorganization plan wasn’t proposed in good faith and improperly strips the insurers and survivors of their rights.  

The ruling follows a September decision in which Judge Lurie Selber Silverstein approved the plan allowing the Texas-based organization to continue operating while compensating tens of thousands of men who say they were sexually abused as children while involved in Scouting. 

Judge Andrews stated that he found no fault with the plan’s initial approval but agreed with Jude Silverstein that it was “an extraordinary case by any measure.” Under the plan, the organization itself would contribute less than 10% of the proposed settlement fund, with the local Boy Scouts council offering to contribute at least $515 million in property and cash, conditioned on certain protections for local troop sponsoring organizations, including civic associations, religious entities, and community groups. 

In addition to the Boy Scouts council contributions, contributions include the Boy Scouts’ two largest insurers, Century Indemnity and The Hartford, who negotiated settlements for a fraction of the billions of dollars in potential liability exposure they faced. Other insurers agreed to contribute about $69 million.

The BSA issued a statement describing the ruling as a “pivotal milestone” that solidifies a path forward for both survivors and Scouting. Many opposing attorneys believe that the cases will reach the Supreme Court. 

Why is there Opposition to the Chapter 11 Upheld Appeal?

More than 88,000 individuals have filed claims saying they were abused as children by troop leaders around the country. However, plan opponents say that the many claims, alongside other factors, suggest that the bankruptcy plan may have been manipulated. 

Insurers opposing the plan state that Boy Scouts of America is contractually obligated to assist them in investigating, defending, and settling claims, as it did prior to bankruptcy. They state that the organization collaborated with claimants’ lawyers to inflate the volume and value of claims to pressure insurers for large settlements to transfer insurance rights to the settlement trust. The insurers argue that if the organization transfers its rights under insurance policies to the settlement trustee, it will have to transfer its obligations under those policies.

Some victims argue that their claims against non-debtor third parties without their consent would violate their due process rights. However, the U.S. bankruptcy trustee, the government’s “watchdog” for Chapter 11 bankruptcies, argued that those releases aren’t allowed under the bankruptcy code and that the extent of the Boy Scout plan’s proposed releases was unprecedented because it potentially involved tens of thousands of entities. 

Boys Scouts of America Bankruptcy

The Boy Scouts of America filed bankruptcy in February 2020, opening a process for people abused in the Scouts to file claims. At the time, BSA had been named in about 275 lawsuits and told insurers it was aware of another 1,400 claims. After campaigns led by personal injury attorneys, claims increased to more than 82,000.

These claims were not limited to abuse from troop leaders. Claims against the Boy Scouts ranged from sexual abuse from any of the following: 

• Assistant troop leaders
• Camp employees
• Volunteers
• Other scouts

Victims had until November 16, 2020, to be eligible to file a claim.

The Carlson Law Firm is Representing Hundreds of BSA Victims

The Carlson Law Firm is committed to protecting the rights of victims of institutional sexual abuse.

Sexual assault and abuse can take a toll on a person’s well-being. However, you are not alone. The Carlson Law Firm is ready to guide you through the legal steps to begin rebuilding your life after child sexual abuse. Our compassionate, hard-hitting legal team will advocate for you to get you started in your recovery. Our firm has the knowledge and a team of attorneys with the knowledge, skill, and passion for ensuring you get justice.

We care. We can help.