Bankruptcy watchdog challenges legal shield in Boy Scouts abuse settlement

0

The Cushman Watt Scout Center, headquarters of the Boy Scouts of America for the Los Angeles Area Council, is shown in Los Angeles, California on October 18, 2012. The Boy Scouts of America, acting on court order, released the Thursday thousands of files detailing allegations and admissions of child sexual abuse within the organization between 1965 and 1985. REUTERS/Fred Prouser (UNITED STATES – Tags: CRIME LAW)

Sign up now for FREE unlimited access to Reuters.com

Check in

  • US Trustee Says Shield Not Allowed Under Bankruptcy Law
  • The official committee of survivors has yet to comment

The company and law firm names shown above are automatically generated based on the article text. We are improving this feature as we continue to test and develop the beta version. We welcome feedback, which you can provide using the feedback tab on the right of the page.

(Reuters) – The U.S. Justice Department’s bankruptcy watchdog on Monday opposed the Boy Scouts of America’s proposed reorganization plan and underlying $2.7 billion sexual abuse settlement, saying it provides impermissible legal protections to insurers and local boards of the bankrupt youth organization, among others. .

The US Trustee said in a court filing that non-debtor releases provided to insurers and others, who have not filed for Chapter 11, in exchange for settlement contributions are not authorized under bankruptcy law.

“The Plan lacks even a cursory discussion of why non-debtor waivers are necessary,” the U.S. Trustee said in Monday’s filing, noting that the waivers were written so broadly that they didn’t it was clear who was covered by them.

Sign up now for FREE unlimited access to Reuters.com

Check in

BSA filed for bankruptcy in February 2020 to resolve allegations by former Scouts over decades that they were abused by troop leaders as children. Since then, more than 82,000 bankruptcy abuse lawsuits have been filed.

The plan aims to settle all of those claims through the $2.7 billion settlement, which will be funded by insurers, local councils (which are separate legal entities), and the BSA itself, among others. Insurers, local councils, committees representing survivors of abuse, current and former BSA officers and employees, and organizations that contracted Scouting units and activities will be among those covered by the non-debtor exemptions. No person who personally committed or was alleged to have committed abuse is protected.

The US Trustee also opposed such releases in the Chapter 11 case of OxyContin manufacturer Purdue Pharma LP. In December, a federal judge struck down a bankruptcy court‘s approval of those releases for members of the Sackler family that owns Purdue. Purdue has appealed that ruling, but it, the Sacklers and several states have also participated in mediation to reach an amended opioid litigation settlement.

The BSA has garnered support from 73.57% of abuse survivors who voted for the plan, but that number is below the 75% it was seeking. Under the plan, survivors would receive compensation based on the severity of the abuse they suffered, among other factors.

The official committee representing abuse survivors in bankruptcy, which has long opposed the settlement, has yet to file documents setting out its opinion on the plan. He has previously argued that the payments the plan offers to survivors who have filed claims are too low. However, a BSA lawyer said last week that “significant progress” had been made in attracting more support to survivors.

BSA representatives did not immediately respond to a request for comment.

The case is In re Boy Scouts of America, US Bankruptcy Court, District of Delaware, No. 20-10343.

For the Boy Scouts: Jessica Lauria, Mike Andolina, Matt Linder and Laura Baccash of White & Case; and Derek Abbott and Andrew Remming of Morris, Nichols, Arsht & Tunnell

For the United States Trustee: David Buchbinder and Hannah McCollum

Read more:

Boy Scouts attorney touts ‘significant progress’ toward sexual assault settlement

Sign up now for FREE unlimited access to Reuters.com

Check in

Our standards: the Thomson Reuters Trust Principles.

Mary Chutchian

Maria Chutchian reports on corporate bankruptcy and restructuring. She can be reached at [email protected]

Share.

Comments are closed.