The decision came after weeks of testimony from abuse experts, financial advisers, and insurance specialists about whether it would be fair – and legal – for the Boy Scouts to route those abuse claims to the compensation fund rather than allowing them to proceed in court. The fund would compensate 82,000 people who claim to have been sexually abused while working for the 112-year-old organization.
US Bankruptcy Court Judge Laurie Silverstein declined to make certain legal findings requested by the Boy Scouts in a complicated ruling of nearly 300 pages and more than 750 footnotes. Her refusal to make specific factual findings related to trust fund distribution rules was one example.
For the Boy Scouts to be released from bankruptcy protection, Silverstein must approve their proposed reorganization. The plan is based on the trust fund and the time-consuming procedures that will be used to determine how much each victim is entitled to receive.
Silverstein didn't say whether she approved or denied the complex compensation fund in her conclusion, instead telling the Boy Scouts that they "have decisions to make regarding the plan and need sufficient time to determine how to proceed."
After Boy Scouts have reviewed her detailed ruling, Silverstein said she will hold a court hearing on the status of the reorganization.
The Boy Scouts eventually settled with the main victims' groups, several wealthy local scouting councils, and some insurance companies after a rocky start to the bankruptcy case in 2020. These organizations contributed $2.7 billion and overwhelmingly supported the proposal.
The Boy Scouts faced approximately 1,400 abuse claims at the start of the case. An advertising blitz by law firms looking for clients increased that figure to 82,000. Some insurance companies criticized the increase, claiming that a large number of the allegations were most likely false.
The remaining insurers, which included American International Group Inc., Liberty Mutual Holding Co., and Travelers Cos., attempted to persuade Silverstein to reject the compensation fund by claiming that the rules for determining who should be paid and how much were unfair.
A few dozen abuse claimants also opposed the plan, arguing that they should be able to pursue their lawsuits in traditional court rather than through the fund. In her decision issued on Friday, Silverstein overruled some of those objections.
Companies argue that the Boy Scout Victim Fund is unfair to insurers.
The plan to establish the trust distribution fund was also opposed by the U.S. Trustee, a federal bankruptcy watchdog, who claims that the deal releases too many groups and individuals from liability.
Boy Scouts of America, 20-10343, United States Bankruptcy Court, District of Delaware (Wilmington).