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Boy Scouts Preparing to Seek Vote on $1.6 Billion Sex Abuse Fund

Sept. 29, 2021, 8:19 PM

The Boy Scouts of America are preparing to ask sex abuse victims to vote for a $1.6 billion trust fund to settle their claims in a key step toward ending its contentious bankruptcy.

The proposal sets potential payments based on the type of misconduct, ranging from $3,500 for allegations that did not include any physical touching to $600,000 for the most severe acts of sexual abuse. Those estimates are base amounts that assume there is enough money to fully cover all claims.

In the coming months, victims will be asked to read a disclosure statement that describes the trust and how it would pay their claims. Depending on how many people apply to the trust and whether more money comes into the fund, victims could collect as little as 21% of the value of their claims to as much as 100%, according to court documents.

U.S. Bankruptcy Judge Laurie Selber Silverstein will take the votes into account when she holds a hearing in late January to decide whether to approve the trust fund as part of the Boy Scouts bankruptcy exit plan. Wednesday, Silverstein finished a multi-day court hearing held by video about the disclosure statement and the voting rules.

Two of the main victim groups involved in the bankruptcy disagree on the exit plan, which is built on a series of settlements. Those groups, insurers who will help fund the trust and the Boy Scout have been in mediation trying to settle their differences.

Payment Plan

Under the payout plan, the Boy Scouts, their local counsels and insurance companies will set up a trust with at least $1.6 billion. That number was used in court documents to estimate recoveries, but it may go up depending on the results of mediation, which resumed Wednesday.

“Use the next two days wisely,” Silverstein told lawyers before the hearing ended and they returned to settlement talks.

An official committee set up by the U.S. Trustee, an arm of the U.S. Department of Justice, opposes the settlements and the plans, arguing it pays too little. A group set up by lawyers representing more than 65,000 abuse victims supports the proposal. That group, the Coalition of Abused Scouts for Justice, signed a key settlement agreement with insurers and the Boy Scouts.

Under that settlement, Hartford Accident and Indemnity Co. and three other insurers will contribute $787 million to a trust fund for victims. The Church of Jesus Christ of Latter-day Saints, which has run scouting programs for decades, will pay $250 million.

The Boy Scouts organization, based in Irving, Texas, sought bankruptcy protection in February 2020, halting hundreds of lawsuits and creating a compensation fund for people who were molested in their youth decades ago by scoutmasters or other Boy Scout leaders.

Since then more than 80,000 claims have been filed related to alleged abuse.

The case is In re Boy Scouts of America, 20-10343 U.S. Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporter on this story:
Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editors responsible for this story:
Claire Boston at cboston6@bloomberg.net

Michael B. Marois, Dawn McCarty

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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