Boy Scouts of America falls short in bid to emerge from sex-abuse bankruptcy

Los Angeles Times

January 4, 2022

By Kim Christensen

The Boy Scouts of America’s bid to emerge from bankruptcy appeared to fall just short Tuesday when a $2.7-billion settlement offer failed to garner enough votes from thousands of men who say they were sexually abused in Scouting.

Although 73% of the nearly 54,000 claimants who cast ballots voted to accept the settlement, the proposal needed at least 75% to ensure confirmation by the bankruptcy judge presiding over the case, according to plaintiffs’ lawyers.

“Survivors understood that the Plan does not adequately compensate them,” said John Humphrey, co-chairman of the official tort claimants committee appointed by the bankruptcy trustee to represent all victims.

The committee said the results would force the Boy Scouts to negotiate a better deal for abuse survivors. The Boy Scouts did not respond to a request for comment.

The results, disclosed in a bankruptcy court filing late Tuesday, capped a contentious two-month voting period in which plaintiffs’ lawyers squared off against one another, some hailing the settlement as the best deal possible for more than 82,000 claimants, while others denounced it as woefully insufficient.

Voting began in October and closed Dec. 28 on the plan, said to be the largest proposed sex-abuse settlement in U.S. history.

The Boy Scouts of America and its local councils had agreed to contribute about $820 million of the proposed settlement amount, with nearly $1.6 million coming from two major insurers, and $250 million from the Church of Jesus Christ of Latter-day Saints and other sponsoring organizations. They include Methodist congregations, which agreed to chip in $30 million.

Even that historically large total would have yielded only “pennies on the dollar” of the claims’ true value, according to opponents, who contended it let the Boy Scouts and others off the hook for billions more in damages.

The settlement also would have released the Boy Scouts and other contributors from civil liability for sexual abuse that occurred before the bankruptcy.

U.S. Bankruptcy Judge Laurie Selber Silverstein, who is presiding over the Chapter 11 reorganization, has scheduled a confirmation hearing in the Delaware Bankruptcy Court for Feb. 22. It was not immediately clear how the voting results would affect the hearing.

Tuesday’s report on the vote comes just shy of two years after the Boy Scouts filed for Chapter 11 bankruptcy protection in February 2020 to stave off a mounting wave of sex abuse lawsuits. The bankruptcy put a hold on hundreds of lawsuits to allow for the negotiation of a global settlement. It also required new abuse claims to be handled in that venue rather than in state courts.

A researcher hired by the Scouts to analyze its internal records in 2019 identified 7,819 suspected abusers and 12,254 victims — a fraction of the number who filed claims.

By Nov. 16, 2020, the court-mandated deadline for filing claims, more than 92,000 were submitted, many from accusers recruited by law firms through TV and internet advertisements. Some 10,000 claims were later weeded out as duplicate filings or otherwise invalidated.

The massive response far outstripped all expectations. Plaintiffs’ lawyers predicted that the number of claims and the total payouts to settle them would easily eclipse those in the sex abuse scandal that engulfed the U.S. Catholic Church more than a decade ago.

At the time, Boy Scout leaders called the massive response “gut-wrenching” and apologized in a statement.

“We are devastated by the number of lives impacted by past abuse in Scouting and moved by the bravery of those who have come forward,” it said. “We are heartbroken that we cannot undo their pain…. We are deeply sorry.”

The Scouts also have called the reorganization plan a “critical step” toward equitably compensating abuse survivors while continuing to carry out its mission.

The Tort Claimants’ Committee estimated last month that the settlement would work out to an average of $28,000 per claim.

Some claimants would be paid more, others less, depending on several factors including the severity of the abuse and where it occurred. Overall, the committee said, the settlement would “fail to capture the billions of dollars” owed to the claimants.

“In a case involving horrific abuse of children, average payments of approximately $28,000 do not begin to justly compensate survivors,” said Richard Pachulski, one of the committee’s attorneys, contrasting it with a recent settlement with USA Gymnastics and the U.S. Olympic and Paralympic Committee, which will pay some 500 sexual abuse survivors about $800,000 each.

He and others who opposed the plan say that it’s main proponent, a coalition of mass tort law firms, opted for expedience by settling with the Scouts’ insurers.

Attorney Ken Rothweiler, co-founder of the Coalition of Abused Scouts for Justice, which has 18,000 members and says its affiliated law firms represent more than 63,000 clients in the bankruptcy, said on a videoconference last month that it had pushed hard to negotiate the historic settlement.

“We’re never going to get enough money to compensate all of the survivors appropriately because no amount of money can … compensate the survivors for what they’ve gone through,” he said. “But our job as the lawyers is to build the biggest fund possible, and that’s what we’ve been doing and that’s what we’ll continue to do.”