Boy Scouts Settlement Pause Marks Shift on Bankruptcy Doctrine

A US Supreme Court order freezing the largest sex abuse settlement in US history signals a break from decades of tradition in how federal courts treat decided bankruptcy cases.

Justice Samuel Alito last week issued an administrative stay that indefinitely paused a $2.46 billion Chapter 11 plan settlement for the Boy Scouts that has already been operating for 10 months. The order throws a wrench in an already fraught process of compensating 82,000 child sex abuse claimants, while raising tough questions about what happens next.

The one-page order conflicts with how judges have traditionally applied what is known as the ...