The Boy Scouts of America has reached a historic settlement agreement with some 60,000 sexual abuse victims that legal experts believe is likely to exceed $1 billion in compensation, a restructuring support agreement filed Thursday in a federal bankruptcy court in Delaware shows.
“After months of intensive negotiations, the Debtors have reached resolution with every single official and major creditor constituency in these chapter 11 cases. The debtors now have a plan of reorganization that is supported by the Future Claimants’ Representative, the TCC, the Creditors’ Committee, JPM (the Debtors’ senior secured lender), the Coalition, and the AHCLC,” attorneys for the BSA wrote.
Attorneys for the tort claimants committee, or TCC, previously estimated the value of some 82,500 sexual abuse claims at about $103 billion, Fox News reported.
Earlier this year, the BSA proposed in its revised bankruptcy plan to issue an unsecured promissory note for $80 million for a victims’ trust fund and to use its restricted assets to cover post-bankruptcy expenses, the Rockland County Times reported. Changes to the youth organization’s original Chapter 11 filing increased the BSA's contribution to the trust fund from $120 million under its previous plan to $250 million.
Under the latest plan, according to Fox News, the BSA’s more than 250 local councils would contribute $600 million into the fund for abuse victims, and at least half of the councils’ contribution would be in cash.
With their contributions to the trust fund and the transfer of insurance rights, the BSA and local councils would be released from liability, Fox News noted. Similar action by sponsoring organizations such as churches and civic groups could also release them from further liability.
Ken Rothweiler, a lawyer representing a group of survivors, told USA Today that the new agreement, which reflects an initial settlement of $850 million, “is the largest settlement of sexual abuse claims in United States history."
"I am pleased that both the BSA and their local councils have stepped up to be the first to compensate the survivors,” Rothweiler said.
Paul Mones, another attorney also representing survivors, told USA TODAY that with contributions from insurance companies, he expects the settlement amount to exceed $1 billion.
"It is important that people see this dollar amount, and know this is not the end; this is just the beginning," plaintiff attorney Jordan Merson told the publication. "There are billions of dollars in insurance money, and the fight to get that money is continuing."
Attorneys for some insurance companies like Century Indemnity Company were displeased with the agreement and said they were shut out of the deal-making process.
Century argued in a filing Thursday that the BSA allowed attorneys representing the victims to reframe the youth organization’s restructuring plan to make it more favorable for their clients while paying themselves significant fees.
“The new Plan, new Disclosure Statement, and new TDPs are the product of the closed-door meetings between BSA and Claimants’ Representatives that have occurred from June 2nd, and from which the insurers were wholly excluded,” Century’s attorneys argued.
“A review of publicly available documents indicates that, after BSA and the Local Councils reached an agreement fixing their contributions to a plan of reorganization, and thus no longer had an economic interest in what claims are allowed, BSA turned over the pen to the claimants’ representatives to re-draft the Plan and the terms for allowing and valuing the claims of their constituents,” they continued. “With only the fox guarding the henhouse, the outcome is utterly at odds with what BSA itself asserted was necessary for a confirmable plan and is permissible under the Bankruptcy Code.”
Roger C. Mosby, president and CEO of the BSA, noted in a declaration in support of the RSA, however, that it is the best path forward because it will allow the organization to compensate survivors and keep the BSA running.
“In my opinion, as well as the Board’s, the path set forth in the RSA is the most realistic approach to achieve the Debtors’ objectives. Any other option would likely involve significant litigation and would not yield the support of holders of Direct Abuse Claims, whose acceptance is necessary to confirm a plan that includes third party releases,” Mosby stated.
“I understand that these releases are essential for a global resolution of abuse claims for the Local Councils that are essential to the Debtors’ ability to carry out the charitable mission of Scouting after the conclusion of these chapter 11 cases,” he added.