Future liability releases at center of Boy Scouts bankruptcy
DOVER, Del. (AP) — Protecting local Boy Scouts of America councils and troop-sponsoring organizations from future liability for allegations of child sexual abuse is key to the national group’s plan to reorganize, officials said. BSA attorneys to a Delaware bankruptcy judge on Tuesday.
Lawyers opposed to the plan have countered that releases from liability for non-debtor third parties are neither fair nor necessary and that they violate the rights of victims of abuse to seek redress for their abuse.
The Boy Scouts, based in Irving, Texas, filed for bankruptcy protection in February 2020, seeking to end hundreds of individual lawsuits and create a settlement trust for victims of abuse. Although the organization faced approximately 275 lawsuits at the time, more than 82,000 sexual abuse complaints were filed in the bankruptcy filing.
The reorganization plan asks the Boy Scouts and its 250 local councils, along with insurance companies and troop sponsoring organizations, to contribute some $2.6 billion in cash and property and cede their rights insurance to a trust fund for victims of abuse. More than half of that money would come from the BSA’s two largest insurers, Century Indemnity Co. and The Hartford. These companies would contribute $800 million and $787 million respectively.
In exchange, parties contributing to the settlement trust would be released from further liability for sex abuse claims dating back decades.
Local BSA councils are not debtors in the bankruptcy, but Boy Scouts attorney Jessica Lauria argued they were inextricably linked to the national organization and deserved protection from future lawsuits. exchange for a contribution to the compensation fund.
“There is no doubt that there is an identity of interests, and frankly an extreme interconnectedness, between the local councils and the national organization,” Lauria said. Sponsoring organizations are also closely linked to the BSA and local councils and essential to their operations, she added.
Local councils solicitor Richard Mason told Judge Laura Selber Silverstein that without the liability waivers the compensation fund “essentially evaporates”.
Without approval of the BSA plan, local councils would face “massive litigation” and be forced to seek bankruptcy protection themselves, jeopardizing the future of Scouting and the ability of survivors of abuse to obtain compensation, Mason added.
But opponents have questioned why the liability waivers for local councils and the sponsoring organization were necessary for the BSA to emerge from bankruptcy. They noted that the Boy Scouts proposed a plan last year under which the settlement trust would be funded solely by the national organization, and only for claims made against it. Under this plan, councils and local sponsoring organizations would make no contribution and would have no protection from liability for claims of abuse.
“The debtors said it was workable, doable,” Silverstein noted. “So why is it necessary to have this elaborate, interconnected, intertwined plan for the Boy Scouts?”
Lauria replied that the “BSA-only plan” may have been feasible when it was first proposed, but it was never “optimal”. She also noted that the BSA has spent some $100 million more in professional fees in the bankruptcy since then and cannot afford to fund a settlement trust itself at this point.
Edwin Caldie, an attorney representing dozens of alleged abuse victims in Guam, argued that the BSA’s current plan unfairly deprives them of their rights to pursue abuse claims against Catholic church officials.
The Guam group includes creditors with claims against the Archdiocese of Agana, which filed for bankruptcy protection in 2019 amid a flood of child sex abuse claims. Many of these claims involve the late priest Louis Brouillard, who was also a BSA Scoutmaster and was accused of molesting over 100 children.
The BSA plan would funnel claims against the Diocese of Guam into the proposed BSA settlement trust without survivors’ consent and unfairly deprive them of the ability to pursue BSA insurance policies, Caldie said.
Caldie accused insurers of using “extortion” tactics in negotiations with the Boy Scouts to obtain liability waivers they would not be entitled to under the policies they issued.
He also rejected the idea that a relatively small number of survivors should not be allowed to interfere with the approval of a reorganization plan backed by tens of thousands of other claimants.
“As a matter of common sense, the BSA made the decision to shun and silence survivors of child sexual abuse for decades and failed to expose their perpetrators for decades,” Caldie said. . “…. Guam survivors are not very comfortable with ‘greater good’ arguments now, especially to buy BSA.”
Closing arguments on whether the judge should approve the BSA plan are scheduled to end on Wednesday.
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