DOVER, Dell – A bankruptcy judge on Thursday approved a proposal by the Boy Scouts of America to enter into a settlement that includes $850 million fund to compensate thousands of men Joe says he was sexually abused as a youth by Scout leaders and others.
But the judge also struck down two key provisions of the deal, potentially jeopardizing the deal the organization was hoping to use as a springboard to emerge from bankruptcy later this year.
After three days of testimony and arguments, Judge Laura Selber Silverstein granted the BSA’s request to enter into a settlement involving the National Boy Scouts organization, about 250 local Boy Scout councils and lawyers representing about 70,000 men. Requested, who say he was sexually abused as a youth for decades. Previously engaged in Boy Scout related activities.
The agreement was opposed by insurers who issued policies to Boy Scouts and local councils, lawyers representing thousands of other abuse victims, and various church denominations sponsoring local Boy Scout soldiers.
It was not immediately clear how Thursday’s ruling would affect the future of the bankruptcy case, given that it affected two key provisions in the restructuring support agreement.
“Basically, everyone has to go back to the drawing board,” said Paul Mons, an attorney representing hundreds of abuse claimants. “I think it’s going to cause a reset.”
Ruling that BSA officers exercised reasonable business judgment required under law to enter into agreement, the judge declined to grant a request that the Boy Scouts be charged legal fees and charges by law firms representing TENS. To be taken Lakhs should be allowed to be paid in the expenses of hired lawyers. Out of thousands of abuse claimants.
Silverstein said he had several concerns about the fee request, including whether an ad-hoc group called the Abused Scouts for Justice was copying the efforts of the Official Victims Committee appointed by U.S. bankruptcy trustees, and whether the Coalition contributed enough. is giving. matter.
The judge also noted that Coalition’s lawyers insisted last year that their legal fees would be paid by the individual law firms they were representing, and that abuse claimants would not be responsible for those costs.
Silverstein said that any payment of legal fees by the Boy Scouts, or victim funds, which were also considered in the settlement, “come directly or indirectly from the pockets of their clients, and in fact all abuse victims’ pockets.” come from.” Is.”
“Any money from abuse victims, especially their lawyers, should be closely investigated,” she said.
David Molton, an attorney for the coalition, said the group is pleased that Silverstein approved the agreement. He said it would enable the coalition and its allies to buy settlements from insurers and sponsor organizations that would bring in “an additional billions of dollars” to compensate survivors.
Molton did not address Silverstein’s denial of a fee arrangement with the Boy Scouts, which he described as “part and parcel” of the agreement at a hearing earlier this week.
Silverstein also denied BSA’s request under an agreement to allow withdrawal from the April settlement, in which insurer The Hartford would pay $650 million to abused claimants in exchange for being relieved of any further liability. .
Silverstein said the Hartford settlement was a separate issue from the agreement, and that BSA’s attempt to use the agreement as a vehicle to back away from that deal was unfair.
“You can’t just roll up whatever relief you want and put it in a request to approve a (agreement),” she said. “… a request to determine the debtor’s obligations or, conversely, Hartford’s damages, is not justified in this context.”
A spokesperson for The Hartford said the company declined to comment.
Irwin Zalkin, an attorney for claimants opposing the settlement, said the judge “blanked out” the key words that supporters were hoping to “box him.”
“I think the (agreement) has gone toothless,” Zalkin said.
The Boy Scouts of America issued a statement calling the decision “a significant development” in the case. The BSA also indicated that it would make a court filing regarding the timing of the hearing beginning Wednesday. The hearing is to determine whether the judge approves a disclosure statement that explains the Boy Scouts’ reorganization plan to creditors. Voting on a plan requires approval of the disclosure statement before ballots can be sent to abusive claimants.
The Boy Scouts, based in Irving, Texas, Seek bankruptcy protection in February 2020 In an effort to prevent hundreds of individual lawsuits and create a sizable compensation fund for the thousands of men molested as youth by Scoutmasters or other leaders. Although the organization was facing 275 lawsuits at the time of filing, it now faces about 82,500 sexual abuse claims in bankruptcy.
Under the agreement, the Boy Scouts will contribute $250 million in cash and assets to a fund for victims of child sexual abuse. Local councils, which run day-to-day campaigns for Boy Scout soldiers, will contribute $600 million. In addition, national organizations and local councils will transfer their rights to Boy Scout insurance policies to victims’ funds. In return, they will be released from future liability for abuse claims.
Opponents of the deal argued that BSA officials failed to inform themselves fully or make reasonable business decisions in entering into the agreement. He said the Boy Scouts Board of Directors never adopted a resolution approving the settlement, and that decision-making authority was delegated to a handful of people on an executive committee and a bankruptcy task force.
“After reviewing the evidence, I have concluded that debtors were sufficiently informed to make this decision,” Silverstein said. “And while a specific (board) resolution would have been better, the evidence is clear that the debtors approved the transaction.”
“A court is not particularly appropriate to address such strategic business decisions,” the judge said. “Debtors may ultimately be wrong in their assessments, but this is not a test of business judgment.”