Boy Scouts’ plan to emerge from bankruptcy approved as landmark case ends
A federal judge gave final approval to the Boy Scouts of America’s plan to emerge from bankruptcy on Thursday, marking the end of the largest sexual abuse case against a single organization in American history.
Judge Laurie Selber Silverstein upheld the plan just over a month after signaling she would do so in a more than 300-page opinion that concluded that a trust at the heart of the scouts’ proposal would be enough to compensate victims of abuse.
Silverstein had rejected part of the plan in her July notice: a $250 million settlement with The Church of Jesus Christ of Latter-day Saints, which she said would protect the church from abuse allegations that were not directly related to Scouting. The scouts later abandoned the colony, Ileaving victims with claims against the church free to pursue them outside of bankruptcy.
At the heart of the bankruptcy plan is a $2.46 billion trust fund for survivors, up from $2.7 billion without the Mormon church’s contribution. In return, the Boy Scouts of America and local councils, troop sponsors, and insurance companies that have contributed to the fund can no longer be sued for past abuses. Victims of abuse will be able to file separate claims against the Mormon Church and insurance companies that have not settled.
Supervision of the trust and its distribution procedures will be entrusted to retired bankruptcy judge Barbara Houser. From there, this process can take months or years, as can potential appeals from those who opposed the plan.
However, for many Scouts, survivors and their attorneys, the decision is a relief after years of legal battles.
“It’s an emotional day,” said Anne Andrews, a lawyer for the Coalition for Abused Scouts for Justice, which is representing abuse plaintiffs in the case. “It was a long time coming but it was worth the wait.”
After:Judge approves major parts of Boy Scouts’ bankruptcy exit plan; pieces remain unresolved
What’s next for victims of abuse?
The hard work of verifying individual claims has yet to begin and will likely take months, if not years.
Survivors have three options:
- Accept an accelerated sum of $3,500 which requires minimal documentation and verification;
- See where they sit on a matrix with compensation ranges based on the type of abuse, which may require additional documentation;
- Pursue an independent review process intended to replicate the sentence they might have received in a civil case.
Debtholders had to choose the fast-track option when they submitted their vote for or against the plan in December – and more than 7,000 of them did so. They won’t have to do anything other than make sure their signature was on their original claim form and sign a release saying they won’t sue the parties who contributed to the trust.
Claims using the matrix option will be reviewed by Houser and his team. They will look at whether an applicant has named or described their abuser, provided information clearly linking the abuse to Scouting, and identified a date or approximate age when the abuse happened – and where it happened. Claims missing any of this information will be rejected.
A matrix is essentially a formula that will help determine who gets how much, with six levels ranging from sexual abuse which did not involve touching – assigned a value between $3,500 and $8,500 – to rape, which could reach $2.7 million.
The extent of the abuse will also be considered: payouts may be higher if the abuse was particularly severe or frequent, if the abuser is accused of abusing others, and if the claimant can show impact negative, such as a need for mental health treatment.
Jason Amala, who along with his colleagues represents more than 1,000 victims of sexual abuse in this case, said these factors can significantly increase or decrease potential payouts.
The third option for claimants to pursue, independent review, was added in the last round of negotiations. It’s designed for those who believe they would have received a substantial jury reward had filing for bankruptcy not cut that path. It requires survivors to pay $20,000 upfront for costs and to prove that Scouts were negligent in their abuse, providing the level of evidence typically seen in trials, including an interview with the survivor and other documents.
Settlement details:Which victims of sexual abuse will get a settlement? And how much?
Continuation of legal action
Abuse survivors with claims that involve entities that did not contribute to the settlement trust may have a fourth option: civil suits.
“The plan does not settle or release all claims against all entities,” Amala said.
Chief among these are the claims against the Mormon Church.
For more than 100 years, the church was one of Boy Scouts’ largest partners until it withdrew its membership at the end of 2019. More than 2,300 claimants have named the church as the chartered organization during their abuse – the highest number for any charter – although Boy Scouts said there could be as many as 10,000.
Because the settlement was dropped, people who were abused in church-sponsored Scouting troops, or at church events that overlapped with Scouting events, can still sue the church.
This logic also applies to other entities that have not settled, including insurers that hold Boy Scouts policies and other chartered organizations. Only the Methodist Church has reached an approved settlement in the plan – thousands of other chartered organizations can still be held liable.
“If you have a claim against an organization chartered before 1976, and that charter didn’t have insurance with one of the insurance companies, you can sue,” Amala said.
Some plaintiffs will be barred from doing so depending on where they live and whether their state has statutes of limitations for suing. Some, including California, have opened windows for filing such lawsuits for some time. California’s so-called lookback window closes at the end of this year.
A record deal
The decision comes two and a half years after the Boy Scouts filed for bankruptcy protection. At the time, the scouting organization said it was facing 275 abuse lawsuits and up to 1,400 other claims.
Months of litigation have proven this to be a gross understatement: over 82,000 abuse complaints have been filed, making it the largest case of child sexual abuse involving a single organization national.
The case broke records in many other respects. More than 9,500 motions, objections and other documents have been filed. At least 11,000 ads ran before the claims deadline.
The Settlement Trust for Survivors has also been hailed as one of the most important in such cases. Still, the average payout for each survivor — around $33,000 — may be among the lowest.
For example, the USA Gymnastics reorganization plan was approved in December and included a $380 million settlement. Before verification and distribution expenses, this averages $760,000 for each of the more than 500 survivors.
The total amount spent on legal and professional fees will also be one for books. The Boy Scouts had spent $266 million at the time of the confirmation hearing in March – more than the $219 million they will pay out to survivors. The scouts paid a $15 million average on professional fees per month, and $3 million pending the judge’s decision, meaning the total could exceed $300 million.
In total, the lawyers, financial advisors and consultants working on the case could split $1 billion, according to an analysis by USA TODAY.
Big winners from the Boy Scouts bankruptcy:Lawyers, who could walk away with 1 billion dollars.
How did we come here?
After nearly two years of often contentious debates, a critical agreement between Scouts and Survivors was reached in February.
The Tort Plaintiffs Committee, the official body representing bankruptcy survivors, said revisions to the plan have resulted in the group’s support, including improved child protection procedures.
“For the first time in BSA history, survivors have a seat at the table to ensure that the safety of children is BSA’s first priority,” said Doug Kennedy, co-chair of the tort plaintiffs committee. and survivor of Boy Scout sexual abuse. .
The Coalition for Abused Scouts for Justice, which also represents survivors but has split from the official committee, also welcomed the deal following weeks of positive negotiations.
Improved security protections will require Scouts to:
- Hire a youth protection officer within six months.
- Form a youth protection committee with surviving members of abuse.
- Hire an independent third party to review its child protection program.
- Carry out a complete review of its training in youth protection.
Looking back:Key Moments and Milestones in the BSA Bankruptcy Case