EXPLANATION: What are the stakes in the Boy Scouts bankruptcy case | Ap thread
DOVER, Del. (AP) – The Boy Scouts of America filed for bankruptcy protection in February 2020 to end thousands of lawsuits filed by men who said they were abused as children by Boy Scout leaders or other leaders. The filing was part of an attempt to achieve comprehensive resolution of abuse complaints and create a compensation fund for victims. The Boy Scouts recently announced an $ 850 million deal with key constituencies, but not all parties involved agree. A judge will hold a hearing starting Thursday to decide whether or not to approve the deal, which could lead to a new reorganization plan for the Texas-based Boy Scouts.
There are still many issues to be resolved and no guarantees that the 111-year-old organization will not be forced to liquidate its assets and cease to exist. Here is an overview of the state of the matter.
The $ 850 million deal includes the national scout organization, some 250 local scout councils, the official victims committee appointed by the bankruptcy trustee, lawyers separately representing 70,000 sexual abuse claimants and lawyers representing victims who may file future claims.
The Boy Scouts have offered to contribute up to $ 250 million in cash and property to the Victims Fund. Local councils, which manage the day-to-day operations of the Boy Scout troops, are said to contribute $ 600 million. In addition, the national organization and local councils would transfer their rights to Boy Scout insurance policies to the victims fund. In return, they would be released from any future liability for abuse claims.
GROUPS OPPOSED TO THE SETTLEMENT
Three key groups oppose the agreement in principle: sponsors of troops such as churches, schools and civic organizations; insurance companies that cover Boy Scouts and local councils; and victims’ lawyers who disagree with other law firms representing the majority of abuse claimants.
I. Churches / Schools / Civic groups
These approximately 41,000 sponsoring organizations are the lifeblood of the Boy Scouts. They are also defendants in numerous sexual abuse lawsuits.
The Church of Jesus Christ of Latter-day Saints was the largest sponsor of troops until it ended the partnership in January 2020. Lawyers for the church opposed the agreement in principle. They say the plan allows victims to sue sponsoring organizations after bankruptcy, while stripping them of insurance policies that could be used to defend themselves.
An attorney representing The United Methodist Church, which is currently the largest Boy Scout sponsoring organization, recently said the current plan threatened “the very future” of the Boy Scouts. “Which organization would choose to do business with Boy Scouts treated like this in the future?” He asked.
II. Insurance companies
The dispute over the insurance proceeds to pay for sexual abuse claims is the most controversial issue in the bankruptcy case.
The Boy Scouts initially estimated that up to 5,000 victims would seek compensation from the proposed settlement fund. Instead, more than 82,000 abuse complaints are in court.
Insurance companies say the passage of time appears to have invalidated tens of thousands of abuse claims, while thousands more lacked critical information to determine their validity. They attributed the large number of complaints to the aggressive advertising of lawyers working with for-profit claim aggregators and electronically signing claim forms, sometimes several hundred per day.
Insurance companies argue that the current reorganization plan illegally deprives them of their rights to challenge claims and improperly allows the trustee overseeing the victim fund to determine what they owe. They also question a provision allowing expedited payments of $ 3,500 to resolve abuse claims, no questions asked.
One company, The Hartford, agreed to donate $ 650 million to the Victims Fund in exchange for being released from any further obligations. But the Boy Scouts are looking to back out of the deal, which was signed in April, as victims’ lawyers say their clients will never support a reorganization plan that includes it.
III. Prosecutors for dissenting victims
The vast majority of the alleged victims, around 70,000 people, are represented by various law firms that support the deal, including several affiliated with a group called the Coalition of Abused Scouts for Justice. The coalition dominated the unfolding of the case, although there is an official victims committee appointed by the US bankruptcy administrator.
Thousands of other alleged victims of abuse, however, are represented by law firms that do not support the deal. Among other things, they want local councils to contribute more than $ 600 million to the victim fund.
Regardless of what their lawyers think, however, it is the abuse survivors themselves who will ultimately determine with their votes whether a reorganization plan is approved.
If the judge approves the $ 850 million deal, then she will hold a hearing from August 25 to decide whether or not to approve a disclosure statement that explains and outlines an updated Boy Scouts reorganization plan. Approval of the disclosure statement is required before ballots can be sent to abuse survivors to vote on the plan. The judge will hold a separate hearing in the fall to determine whether to approve the plan itself.
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