Boy Scouts bankruptcy plan to be voted on by abuse seekers


DOVER, Del. – More than a year and a half after the Boy Scouts of America filed for bankruptcy protection amid a wave of child sexual abuse allegations, tens of thousands of men who say they were assaulted as children by scout leaders and others will soon have the chance to vote on a plan to reorganize the BSA.

The Boy Scouts, based in Irving, Texas, filed for bankruptcy protection in February 2020, seeking to end hundreds of individual lawsuits and create a fund for men who say they have been sexually abused in their childhood. Although the organization faced 275 lawsuits at the time, it now faces more than 82,000 sexual abuse claims in the bankruptcy case.

Although the plan was sent to abuse applicants for a vote, there are several issues involving Boy Scout insurers and local troop sponsorship organizations that remain unresolved.

Here is an overview of the state of the matter:

DISCLOSURE STATEMENT

Following a two-week hearing, a judge on Thursday approved a revised disclosure statement that outlines and explains the Boy Scouts’ reorganization plan.

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Approval of the disclosure statement was required before the Boy Scouts could begin sending out ballots to abuse claimants and other creditors to vote on the plan.

Among the issues discussed at the disclosure statement hearing were provisions to ensure that ballots and information packages are sent to all applicants, including incarcerated men, while protecting privacy. those who do not want Scout related communications sent to their homes.

The judge and lawyers also discussed provisions to ensure that law firms that represent multiple abuse claimants and wish to submit “lead votes” on behalf of their clients prove that they have obtained permission from each. customer who does not wish to submit a ballot themselves.

THE PLAN

The plan calls for the Boy Scouts and its some 250 local councils to contribute up to $ 820 million in cash and property to a fund for abuse seekers. They would also cede certain insurance rights to the fund. In return, local councils and the national organization would be released from any additional responsibility for sexual abuse complaints.

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The plan also includes settlement agreements involving one of the Boy Scouts’ main insurers, The Hartford, and its former largest troop sponsor, The Church of Jesus Christ of Latter-day Saints, commonly known as the Mormon Church. . The Hartford has agreed to contribute $ 787 million to the fund for abuse seekers, and Mormons have agreed to contribute $ 250 million for abuse related to church scouting programs. In return, the two entities would be released from any further responsibility regarding complaints of child sexual abuse.

Boy Scout lawyers and abuse claimants say they still hope to reach settlements with other insurers and sponsoring organizations, but it’s unclear if they will.

COMPETITIVE RECOMMENDATIONS

The official committee appointed by the US bankruptcy trustee to represent and act in the best interests of all survivors of sexual abuse recommends that abuse seekers reject the Boy Scout plan.

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In a draft letter filed with the court, the nine abuse survivors on the committee said the plan was “grossly unfair” and represented only a fraction of the potential liabilities of the settlement parties and what they should. and can pay.

A major flaw, according to the committee, is that agreements with local Scout councils would leave them over $ 1 billion in cash and goods above what they need to accomplish the mission of Scouting. The committee also notes that sponsoring organizations such as churches and civic groups can avoid liability for abuse claims dating back to 1976 simply by transferring their interests in insurance policies purchased by the BSA and local councils to the fund. help the victims, without paying money or goods.

Meanwhile, lawyers separately representing tens of thousands of abuse claimants have submitted their own letter urging abuse claimants to vote for the plan. They say this will translate into billions of dollars in compensation for survivors of abuse and represent the best possible outcome for them.

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The letter was drafted by lawyers representing an ad hoc group called the Coalition of Abused Scouts for Justice and the court-appointed lawyer for those who might file claims in the future, including the men who have repressed memories of their abuses. The coalition represents nearly 18,000 asylum seekers and is affiliated with more than two dozen law firms that collectively represent more than 60,000 asylum seekers.

VOTING ACCOUNT

A key point of contention has been a plan provision allowing a claimant to receive an “expedited distribution” payment of $ 3,500, with virtually no questions asked, and bypassing the claim assessment process. .

These payments should be an attractive option for those who have filed false claims, claims that lack the required information and may not survive the claims assessment process, and claims that would be barred in non-bankruptcy lawsuits due to the passage of time.

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Those who do not opt ​​for the $ 3,500 payments would have their claims considered in the distribution trust proceedings, risking uncertain recoveries on an uncertain schedule in exchange for a potentially larger payment.

Lawyers for the official committee representing victims of abuse have expressed concern that those opting for the $ 3,500 payments could improperly influence the vote in favor of the plan. The judge denied the committee’s request to approve two separate voting classes, one for those who accept expedited payment and the other for those who do not. However, she ordered that any claimant wishing to receive the payment of $ 3,500 should indicate so on their ballot.

“We’re going to find out… if the votes of survivors who choose the $ 3,500 cast tip the class,” the judge said last week.

CASE CALENDAR

With the judge’s approval of the disclosure statement, ballots and information packages will be sent to more than 82,000 asylum seekers over the next two weeks. Ballots must be returned by December 14 and a preliminary report on the results of the vote is expected a week later. A final voting report is expected on January 4.

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The judge has scheduled a hearing to begin on January 24 to review the results of the vote and decide whether the plan meets bankruptcy code requirements and must be approved.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.


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