The Boy Scouts are offering up to $850 million in cash and other assets to survivors, and signing over insurance rights to a trust that would administer claims and distribute payments, according to an agreement filed in bankruptcy court on Thursday.
The proposed deal “ensures we have the overwhelming support of survivors” to emerge from bankruptcy, the Boy Scouts said. If completed, the settlement plan would rank among the largest in U.S. history over sexual abuse.
The Wall Street Journal reported in June that the youth group was nearing a deal with a coalition of law firms representing the bulk of the roughly 84,000 men who have filed claims over childhood abuse. Other victims’ representatives have now signed on, significantly broadening support for the plan.
It must be put to creditor vote and win approval from the U.S. Bankruptcy Court in Wilmington, Del., to take effect. Absent from the proposed deal are insurance carriers that are potentially on the hook for victim claims under policies they sold the Boy Scouts decades ago, when most of the alleged abuse occurred.
“The insurance is really where the bulk of the money’s going to come from,” said victims’ lawyer Ken Rothweiler. “There’s billions of dollars in insurance rights against some of the largest insurance companies in the country.”
Insurers including Chubb Ltd. ’s Century Indemnity Co., Travelers Cos. and American International Group Inc. said in court papers filed Thursday they were excluded from closed-door talks on the proposed deal. They alleged the Boy Scouts had “turned over the pen” to victims’ lawyers to set the terms under which abuse claims will be valued and paid.
The Boy Scouts are aiming to exit bankruptcy by this fall, which is the group’s peak recruiting season for prospective scouts. If approved by the bankruptcy court, the proposal would protect the Boy Scouts and hundreds of its affiliated local councils spread across the country from future litigation over sex-abuse claims.
The youth group said Thursday that the proposal “will equitably compensate survivors and ensure scouting’s future by resolving past abuse cases for both the national organization and local councils.”
The local councils, which hold the bulk of the Boy Scouts’s wealth, aren’t themselves in bankruptcy but have been sued alongside the organization and face liabilities large enough to tip some of them into insolvency.
Richard Mason, a lawyer for a committee of local councils, said the outcome “represents a major step toward both equitably compensating abuse survivors and ensuring the Scouting mission continues for millions of youth now and in the future.”
Assets being contributed by the Boy Scouts include cash, artwork, property and the surplus proceeds from an overfunded executive pension, court records show. The settlement amount could be reduced if the bankruptcy case drags on longer than expected.
The Boy Scouts have also agreed to petition the bankruptcy court to walk away from a previous $650 million deal with one of its insurers, Hartford Financial Services Group Inc. Victims’ lawyers have said they considered the deal with Hartford to be unacceptably low.
A Hartford spokesman said it was disappointed the Boy Scouts are seeking to “discard a thoughtfully negotiated and mutually agreed upon deal.”
“Without a single commitment from any of its insurers, the Boy Scouts are jeopardizing both the continuation of their mission, as well as the fair and more timely compensation of all legitimate victims of abuse,” the spokesman said. “We’re prepared to vigorously defend our positions in the Boy Scouts’ bankruptcy case and related litigation.”
The Boy Scouts have apologized for the lives twisted by childhood trauma and said that at least 85% of reported incidents of abuse predate youth-protection protocols put in place three decades ago. The Boy Scouts, founded in 1910, have been plagued by reports of sexual misconduct by employees and volunteers for decades, but it wasn’t until last year when the organization asked victims to step forward that the full scope became clear.
The bankruptcy case brought into the open a wealth of details about alleged abuse by scout leaders and others on camping trips and at other venues, helping spark a criminal probe by Michigan’s attorney general.
The number of abuse claims against the Boy Scouts nationwide far surpasses those made against the Catholic Church or other institutions accused of failing to protect children from predators, according to some studies.
Changes to laws in California, New York and other states in recent years suspended the statutes of limitation on sexual abuse, allowing survivors to sue perpetrators and institutions no matter when the alleged misconduct took place. The Boy Scouts filed for bankruptcy last year in response, saying the organization couldn’t afford to defend the growing number of lawsuits in state courts.
For decades, the Boy Scouts kept confidential files detailing reports of abuse, but victim advocates have said that executives often failed to report allegations to law enforcement, or to prevent the abuse from reoccurring. The Boy Scouts said in 2019 that decades ago, the organization in some instances allowed individuals to return to scouting even after credible accusations against them.
The youth group has since said that all cases of suspected abuse are reported to law enforcement and that its internal files on abuse reports have been misrepresented over the years.
Victims’ groups said Thursday that a compensation trust established under the chapter 11 plan will be given “access to documents and records concerning past abuse, as well as rosters and other information necessary to assess and resolve abuse claims.”