Boy Scouts Urge Supreme Court Not to Freeze Bankruptcy Plan

The US Supreme Court should reject efforts to pause the Boy Scouts of America’s bankruptcy plan and the work of a $2.46 billion sex abuse settlement trust while it crafts a decision on the Purdue Pharma case, the organization argued.

Boy Scouts filed papers with the high court on Thursday evening in response to a Feb. 9 request by some abuse claimants who are seeking to unwind the nonprofit’s Chapter 11 plan, which went active last year. The abuse victims appealing the Boy Scouts bankruptcy plan, which established the largest sex abuse settlement in US history, say that the Supreme Court should issue an order halting the settlement while it considers related questions in Harrington v. Purdue Pharma.

At the heart of the Boy Scouts’ settlement dispute, which includes more than 82,000 abuse claims, are provisions that remove liability for non-debtor affiliates without the consent of affected parties. Those favoring the settlement say the releases are essential to making the plan work.

The 144 claimants appealing the Boy Scouts bankruptcy plan represent less than 1% of the former scouts who will receive compensation from the settlement trust, the organization said, noting that some of the funds have already been distributed in the last 10 months since the plan went effective.

The claimants, who are in the midst of challenging the Boy Scouts plan at the US Court of Appeals for the Third Circuit, “do not provide any legal authority for the extraordinary relief they seek,” the organization said.

Unlike Purdue Pharma’s plan, which includes a $6 billion settlement releasing future claims against opioid OxyContin manufacturer’s former Sackler family owners, the Boy Scouts plan releasing claims against a nationwide network of local councils and scouting activity sponsors “will satisfy all abuse survivors’ claims in full,” it said.

“And BSA’s Plan (unlike Purdue’s) has already taken effect and been judicially determined to be substantially consummated, making it both legally and practically impossible for an appellate court to unwind that plan now,” it added.

Groups of claimants who voted in favor of the plan and BSA insurers providing the bulk of the bankruptcy settlement cash also filed briefs Thursday, urging the Supreme Court not to pause the trust’s work. The trustee appointed to evaluate former scouts’ abuse claims and distribute settlement funds also cautioned against disrupting the work of the trust.

The justices, who appeared divided during arguments in early December over the legality of nonconsensual third-party releases in Purdue’s bankruptcy plan, are expected to issue a decision in the coming months.

The Boy Scouts emerged from Chapter 11 last year after more than three years in bankruptcy as it painstakingly negotiated a plan to settle abuse claims going back several decades.

The case is Lujan Claimants v. Boy Scouts of America, U.S., No. 23A741, response filed 2/15/24.