Boy Scouts Bankruptcy Plan, Abuse Deal Avoids High Court Review

The US Supreme Court declined to take up an appeal challenging the Boy Scouts of America’s bankruptcy plan and $2.46 billion child sex abuse settlement, freeing up the bulk of funds held in reserve for survivor payments.

The high court’s rejection Monday of an October petition filed by a group of 75 former scouts based in Guam gives finality to a nearly three-year-old plan set up to compensate roughly 82,000 abuse claimants.

Approximately $1.65 billion in funds from settling Boy Scouts insurers can now be released from an escrow reserve to bolster survivor payments.

With its denial order, the high court leaves in place a May ruling by the US Court of Appeals for the Third Circuit affirming approval of the Chapter 11 plan.

Although an 85% majority of voting claimants supported the plan, which went into effect in April 2023, a small contingency spent years fighting the arrangement over provisions that released the nonprofit’s nationwide network of local councils and scouting activity sponsors from future lawsuits stemming from decades of failure to protect children from predatory scoutmasters and volunteers.

The Boy Scouts’ plan survived on appeal even though the Supreme Court in 2024 outlawed bankrupt companies from using Chapter 11 plans to force creditors into releasing legal claims against third parties.

In its ruling last year, the Third Circuit acknowledged that the Boy Scouts agreement would be impermissible if it was proposed at some point after the high court’s opinion in Harrington v. Purdue Pharma LP. But, the three-judge panel said, bankruptcy law insulates key transactions underlying the confirmed plan and prevents disruption “at this late stage.”

Frustration over payments has been escalating as distributions have been capped at just 1.5% of claim values.

The petitioners are represented by Subbaraman PLLC and Lujan & Wolff LLP. Boy Scouts is represented by White & Case LLP, Morris Nichols Arsht & Tunnell LLP, and Perkins Coie LLP.

The case is Lujan Claimants v. Boy Scouts of America, U.S., No. 25-490, order 1/12/26.