The Boy Scouts of America released a bankruptcy reorganization plan late Monday calling for local councils to contribute at least $300 million to a trust to settle tens of thousands of sex-abuse claims.
The long-awaited reorganization plan, filed as part of the Boy Scouts’ Chapter 11 bankruptcy proceedings, begins to outline how the organization aims to compensate the deluge of about 85,000 potential victims who came forward last year with claims. But lawyers on behalf of both the victims and the group’s insurers say they are unsatisfied with the plan.
The Boy Scouts of America, which filed for bankruptcy in February 2020, had initially sought to shield its local councils from the bankruptcy process. But more recently, it became clear that any settlement was going to involve local council participation, and Monday’s filing anticipates a $300 million contribution from some of the Boy Scouts’ 253 councils across the country. The plan did not state which councils would contribute to the fund, or how.
To fund the settlement trust, the Boy Scouts of America will also contribute a collection of Norman Rockwell paintings, a warehouse facility in North Carolina, the rights to a Scouting University property in Texas, certain oil and gas interests in several states, and any unrestricted cash above a $75 million minimum.
Ricky Mason, the chair of the ad hoc committee of local councils, described the plan as “an important step toward a global resolution that both provides meaningful compensation for abuse claims and preserves Scouting for the millions of youth who benefit from its programs today.”
But Michael Pfau, a lawyer who represents about 1,000 people who have filed abuse claims in bankruptcy court, said the $300 million amount was “woefully insufficient” given the staggering number of claims and the Boy Scouts’ assets, which are listed at $1 billion and include four high-adventure bases such as the Summit Bechtel Reserve in West Virginia and the Philmont Scout Ranch in New Mexico.
“It’s clearly them trying to ramp up a plan where they literally feel no pain and move beyond this quickly, leaving the abuse survivors in the dust,” Pfau said, adding he believes the reorganization plan will be received “very poorly” by the tort creditors committee and advocates of survivors. “It’s such a fraction of the assets that they’re able to pay.”
In a statement, the Boy Scouts of America described the plan as “a critical step to our emergence from bankruptcy.”
“The plan demonstrates that considerable progress has been made as we continue to work with all parties toward achieving our strategy to provide equitable compensation for victims and address our other financial obligations so that we can continue to serve youth for years to come,” the statement read. “There are still many aspects of the plan that we are refining through ongoing mediation, but the amended plan is an important step in demonstrating progress that we believe will ultimately lead to a final plan that the bankruptcy court will confirm.”
In coming months, the Scouts will file a more detailed breakdown of the process to compensate survivors and additional details about how local councils will be involved, the statement from the Boy Scouts said. The organization said it aims to emerge from Chapter 11 proceedings by this fall.
In November, after a deadline passed for victims to file abuse claims in bankruptcy court, a lawyer representing the Boy Scouts of America said the organization needed to reach a settlement by the summer of 2021 – or risk running out of the necessary cash to continue operating. About 95,000 sex-abuse claims were filed in bankruptcy court before the deadline, but several thousand of those were later deemed to be duplicates.
The Boy Scouts faced a major drop in revenue last year as the COVID-19 pandemic closed schools and halted many in-person Scouting programs, weakening membership that was already on the decline.
As the Scouts aim to emerge from a costly bankruptcy process as quickly as possible, Pfau said, “this plan makes it a lot more difficult.”
Lawyers for the BSA’s insurance companies were unsatisfied with the plan for different reasons. In recent court proceedings, insurers have requested discovery to examine the validity of tens of thousands of abuse claims, alleging some of these claims were generated by for-profit aggregators and “misleading advertising campaigns.”
In a statement Monday, Tancred Schiavoni, a lawyer representing Century Indemnity Company, said the court should allow insurers to question some of the lawyers representing large numbers of people who have filed sexual abuse claims.
“Century supports a fair resolution for survivors of sexual abuse, but this plan doesn’t get us there,” Schiavoni said. Allowing invalid and fraudulent claims will hurt valid survivors of sexual abuse by delaying and diluting any compensation they may receive.”