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Boy Scouts’ Victim Trust Plan Met With Pushback (Correct)

March 2, 2021, 5:44 PM; Updated: March 5, 2021, 6:06 PM

The Boy Scouts of America’s plan to settle legacy sexual abuse claims against the organization through a dedicated trust “woefully fails” to adequately compensate 85,000 victims, a committee of survivors said.

The nonprofit organization on Monday proposed a plan to reorganize in bankruptcy that would provide just $6,100 to each individual who has come forward with claims of sexual abuse experienced as a scout, an official committee of Boy Scouts tort claimants said in a statement.

“The plan violates every word and the spirit of the Boy Scout oath that each of us took as kids,” committee Chairman John Humphrey said.

The Boy Scouts, which filed for bankruptcy a year ago, will contribute to the settlement trust unrestricted cash above a $75 million minimum to operate, according to its Chapter 11 plan filed with the U.S. Bankruptcy Court for the District of Delaware. It also will contribute an artwork collection that includes Norman Rockwell’s paintings, oil and gas interests in over 1,000 properties, and specified real estate.

The Boy Scouts doesn’t have a calculated value of the assets it’s contributing, although the tort committee said they’re worth around $220 million.

The national organization operates through 253 local councils across the country that haven’t filed for bankruptcy. But the local councils also could receive the benefit of a litigation release through the plan. The Boy Scouts said it’s committed to ensuring that the network of local councils contributes at least $300 million to the trust in exchange.

The settlement plan also would allow abuse victims, who’ve filed more than 95,000 claims against the organization, to pursue additional recoveries from the Boy Scouts’ liability insurance providers.

The plan is likely “dead on arrival,” the Coalition of Abused Scouts for Justice, an ad hoc group of more than 11,000 claimants, said in a separate statement Tuesday.

“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,” the Boy Scouts said in a statement provided to Bloomberg Law Tuesday.

“In the coming months, supplements to the Plan will include a more detailed breakdown of the process to compensate survivors and more details about how local councils will support this effort,” it said.

Insurer Blowback

Insurer Century Indemnity Co. also criticized the restructuring plan for including all abuse claims filed against the organization since it entered bankruptcy in February 2020.

“Allowing invalid and fraudulent claims that will hurt valid survivors of sexual abuse by delaying and diluting any compensation they may receive,” Tancred Schiavoni of O’Melveny & Myers LLP, an attorney for the insurer, said in a statement.

Century and affiliates of Hartford Financial Services Group Inc. have asked the court to authorize an investigation into the “claim explosion” that occurred after the organization filed for bankruptcy. Thousands of claims filed by plaintiffs’ attorneys appear “unsubstantiated, fraudulent, or otherwise invalid,” the insurers said.

Judge Laurie Selber Silverstein hasn’t ruled on the request.

The Boy Scouts seeks to begin circulating its plan to creditors by late April, the organization’s attorney, Jessica Lauria of White & Case LLP, told the court last month. The organization risks running out of cash later this year without a deal, she said previously.

The organization is hoping to emerge from bankruptcy by the fall.

The case is In re Boy Scouts of Am., Bankr. D. Del., No. 20-10343, plan filed 3/1/21.

(March 2 story updated to correct judge's name.)

To contact the reporter on this story: Alex Wolf in New York at awolf@bloomberglaw.com

To contact the editors responsible for this story: Roger Yu at ryu@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com

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