Boy Scouts Secure More Abuse Survivors for $2.7 Billion Bankruptcy Settlement

An additional 9,000 people who claim they were sexually abused while in the Boy Scouts of America voted in favor of a $2.7 billion compensation plan, bringing it to nearly 86 percent of all ballots cast ahead of a bankruptcy-court trial next week.

Source: WSJ | Published on March 11, 2022

SAINT LOUIS, UNITED STATES - OCTOBER 16, 2017: Eagle patch and merit badge sash on Boy Scouts of America (BSA) uniform

The additional votes among the approximately 82,200 people who have filed sexual-abuse claims against the youth group increase its chances of winning approval for the settlement from Judge Laurie Selber Silverstein of the United States Bankruptcy Court in Wilmington, Del., at a trial set to begin Monday.

The final tally, which was released late Thursday, puts the Boy Scouts above their self-imposed target of three-quarters support from abuse survivors.

While two-thirds approval from creditors is generally required for a proposed deal under bankruptcy law, chapter 11 cases involving mass injury and tort liabilities typically require more support. According to the Boy Scouts, 75 percent approval from survivors would make court approval easier, while anything less could make the bankruptcy plan more vulnerable to legal challenges from objectors.

Bankruptcy law does not specify how much victim support is required for a chapter 11 plan to be approved. In a mid-January tally, the Boy Scouts fell just short of their 75 percent target, but they later won over some of their harshest critics. Survivors were allowed to change their votes before the final tally on Thursday.

According to a court filing, more than 56,500 individual claimants voted.

The youth group is under financial duress to conclude the bankruptcy case and exit chapter 11. The bankruptcy plan includes contributions from the national organization, many affiliated local councils, the Boy Scouts' largest insurers, and some troop sponsors to create the nation's largest sex-abuse compensation fund.

Some abuse plaintiffs and liability insurers continue to oppose the proposed plan. Objections have also been raised regarding proposed grants of legal immunity for related parties that aren't in bankruptcy, such as local councils, religious and civic organizations, and other insurers, even though some haven't agreed to settlement terms for the abuse liability they may share with the Boy Scouts.

Following revisions to the bankruptcy plan, such as changing the compensation trust for abuse survivors to include a new option for an independent claim review, some holdout plaintiffs' firms switched their votes to support the Boy Scouts. After the bankruptcy is over, trustees will manage the compensation fund, value claims, and distribute payments.

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