Boy Scouts bankruptcy case: support agreement reached

The organization and lawyers for victims of abuse have been very distant on compensation. A hearing in the case is scheduled for July 20.

DOVER, Del. – The Boy Scouts of America have reached an agreement with lawyers representing some 60,000 victims of child sexual abuse in what could prove to be a pivotal moment in the organization’s bankruptcy case.

BSA lawyers filed court documents Thursday evening describing a Restructuring Support Agreement, or RSA, with lawyers representing victims of abuse. The agreement includes both the official Civil Liability Plaintiffs Committee, which is charged with acting as the bankruptcy trustee for all victims of abuse, as well as a separate group of plaintiffs called the Coalition of Abused Scouts for Justice. It also includes attorneys representing local Boy Scout councils and attorneys appointed to represent victims who may file future claims.

“After months of intensive negotiations, the debtors have reached a resolution with every official party and major creditor in these Chapter 11 cases,” the BSA lawyers wrote.

The agreement signals that the BSA recognizes that the gap between lawyers representing victims of abuse and those representing BSA insurers is currently too wide to be resolved. They could very well be left to resolve their differences in future court battles, a prospect the BSA had sought to avoid.

The Boy Scouts of America, based in Irving, Texas, filed for bankruptcy protection in February 2020, set to end hundreds of lawsuits and create a compensation fund for men who were abused as children by Scout leaders or other leaders.

But BSA lawyers were unable to get victims’ lawyers, local BSA councils and sponsoring organizations, and insurers to agree on a global resolution that would compensate. victims of abuse while allowing the Boy Scouts of America to continue to function.

In an earlier court filing Thursday, lawyers for some insurance companies accused the BSA of allowing lawyers for victims of abuse to rewrite the BSA’s restructuring plan to include terms favorable to their clients.

“With only the fox guarding the henhouse, the result is totally at odds with what BSA itself has claimed is necessary for a confirmable plan and is licensed under the bankruptcy code,” the insurers wrote.

Lawyers for the insurers appear particularly concerned that the BSA’s liability for abuse claims would be tried under proposed trust distribution proceedings for the purpose of deciding insurance coverage issues.

Meanwhile, as part of the Restructuring Support deal, Boy Scout lawyers are asking U.S. bankruptcy judge Laurie Selber Silverstein to declare that they have no obligation to seek court approval. a previously announced settlement with The Hartford, one of the BSA’s insurers.

The Hartford agreed to pay the Victims Trust $ 650 million in exchange for being released from any further obligations under policies dating back to 1971. The agreement allowed Hartford to pay a lesser amount if the BSA or the Settlement Trust Reaches Deal With Another Large Insurer BSA, Century Insurance Group, and Century’s settlement amount is less than twice that of The Hartford, or $ 1.3 billion.

The Hartford settlement has come under heavy criticism from abuse attorneys, who estimate the insurer’s liability exposure to billions of dollars. They made it clear that the victims would not support any plan that included the Hartford settlement.

The Boy Scouts said between $ 2.4 billion and $ 7.1 billion, including insurance fees, may be available for victims of abuse. Lawyers for the Tort Plaintiffs Committee, or TCC, have estimated the value of some 82,500 sexual abuse claims at around $ 103 billion.

“All of the plaintiffs’ representatives, who represent the vast majority of holders of direct abuse claims, have indicated that any plan containing the Hartford settlement will be flatly rejected,” BSA lawyers wrote in Thursday’s court file. “Without their support, being forced to pursue a plan that incorporates the Hartford Colony seems futile. “

In a joint statement, the Coalition, TCC and the future representative of the plaintiffs said the Restructuring Support Agreement will allow the Boy Scouts to emerge from bankruptcy “while providing meaningful compensation to victims and obliging insurers Boy Scouts to abide by the terms of insurance policies underwritten by Boy Scouts and their affiliates for many decades.

In a revised plan submitted just two weeks ago, the BSA offered to issue an $ 80 million unsecured promissory note to a trust fund for victims of abuse. He also proposed using restricted assets to help cover post-bankruptcy operational expenses, which would represent up to $ 50 million in unallocated cash available to survivors of abuse. With the changes, BSA’s proposed contribution to the trust fund would increase from around $ 120 million under a previous plan to around $ 250 million.

Under a new plan due to be tabled on Friday, the more than 250 local BSA councils would contribute $ 600 million to the fund for victims of abuse, double an earlier offer of $ 300 million. of this year. At least half of the councils contribution would be in cash.

In return for their contributions to the trust fund and the transfer of insurance rights, the BSA and the local communities would be released from their liability. Sponsoring organizations such as churches and civic groups could also be released from any additional liability in exchange for a contribution to the fund and the transfer of insurance rights.

A hearing in the case is scheduled for July 20.

Comments are closed.