By Peg Brickley
The Boy Scouts of America are offering cash, artwork and other
assets to sex-abuse victims under a bankruptcy plan filed Monday,
an opening gambit by the youth group to move past the failures to
protect children that have threatened its standing in American
Sexual abuse by Boy Scout volunteers has put the organization's
survival at risk unless it can build support for its chapter 11
exit proposal, which offers recompense to abuse victims for the
damage done to them as children. The Boy Scouts have apologized and
said they want to make peace with the 85,000 people who stepped
forward after the organization filed for bankruptcy to claim they
were sexually abused.
For the Boy Scouts to succeed, a judge in the U.S. Bankruptcy
Court in Wilmington, Del., will have to decide that the settlement
offer the institution sketched out Monday is fair. Victims will
have the chance to vote, as will other stakeholders in the
The chapter 11 plan would set up a settlement trust to evaluate
abuse claims and administer payments, drawing on assets contributed
by the Boy Scouts. The organization is proposing to contribute a
collection of Norman Rockwell paintings, certain oil and gas
interests, and the organization's excess cash above a $75 million
Insurance companies that wrote policies covering the Boy Scouts
have financial interests on the line. Those policies, which victims
are counting on for a big portion of the collective compensation,
also would be signed over to the trust.
The official committee representing abuse victims criticized the
bankruptcy plan upon its release, saying it didn't offer adequate
compensation "or provide any enhanced systematic protections for
future generations of scouts."
The Boy Scouts turned to bankruptcy more than a year ago as they
faced about 275 sex-abuse lawsuits and the potential for many more
as states including California and New York suspended statutes of
limitations on such claims.
They were following a strategy pioneered decades ago by
corporations facing crippling liabilities due to asbestos, a
cancer-causing material that was once in wide use. Bankruptcy
offered a pathway to preservation for some businesses swamped with
product-liability cases numbering into the tens of thousands.
In recent years, bankruptcy has offered a way to resolve a
widening range of alleged misconduct or negligence that sparked
litigation. Catholic dioceses and religious orders, the governing
body for U.S. gymnastics, and Harvey Weinstein's former film studio
resorted to bankruptcy to address claims of sexual abuse.
When the Boy Scouts sought bankruptcy, they expected about
12,000 sex-abuse claims to be filed. Instead, about 85,000 claims
emerged, making it the largest chapter 11 filed over sexual abuse,
dwarfing the combined total of claims in more than two dozen
bankruptcies filed by Catholic dioceses and religious orders since
Sexual predators began infiltrating the ranks of Boy Scout
volunteers almost as soon as the organization formed, internal Boy
Scout files on abuse reports that date back decades show. The Boy
Scouts were forced to divulge thousands of the files in an Oregon
abuse case in 2010, offering a hint of the size of the scandal.
The bankruptcy is aimed at restoring the Boy Scouts' brand,
compensating victims, protecting critical assets and safeguarding
most of the billions of dollars in wealth held by the
organization's local councils, which aren't themselves in
The local councils are being asked to contribute $300 million
toward the settlement, in exchange for the same protection from
legal liability over sexual abuse that the national organization is
seeking. The local councils haven't agreed to support the deal
framework and remain in private mediation with victims'
Douglas Kennedy, co-chair of the official victims committee,
said, "They want to force us to release the local councils but have
not provided the financial transparency that is necessary for
survivors to make an informed decision on whether to release the
local councils where the majority of the abuse occurred."
Ricky Mason, a lawyer representing a group of local councils,
said the bankruptcy plan marks "an important step toward a global
Insurers also haven't signed on and have been putting up a
fight, suing before bankruptcy to challenge the Boy Scouts' right
to tap the policies and casting doubt on the veracity of thousands
of claims filed after the bankruptcy for compensation.
Much like the Boy Scouts, insurers owned by Chubb Ltd. and
Hartford Financial Services Group Inc. are following a playbook
established in the bankruptcies of companies that produced asbestos
products. The insurers have argued that prospects of payments from
a fat bankruptcy trust has drawn out fraudulent claims, fueled by
greedy lawyers whose clients should have to face questioning to
determine how much potential fraud may be lurking in the 85,000
"Allowing invalid and fraudulent claims will hurt valid
survivors of sexual abuse by delaying and diluting any compensation
they may receive, " said Tancred Schiavoni, a lawyer for Chubb's
Century Indemnity Co. "The court needs to first implement a process
to root out the bad claims generated by for-profit claims
aggregators and misleading advertising campaigns."
The Boy Scouts have said they believe victims and want to repair
the damage. The largest committee of abuse victims has said the
insurers are only seeking to intimidate and retraumatize victims to
leverage a better deal.
The chapter 11 plan calls for protecting the Boy Scouts' four
flagship high-adventure camps -- the Philmont Scout Ranch in New
Mexico, Northern Tier in Minnesota and Canada, the Summit Bechtel
Reserve in West Virginia, and the Sea Base in Florida.
Andrew Scurria contributed to this article
Write to Peg Brickley at firstname.lastname@example.org
(END) Dow Jones Newswires
March 01, 2021 22:23 ET (03:23 GMT)
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