Dioceses. Boy Scouts. USA Gymnastics: The Real Reason They’re Crying “BANKRUPTCY”
AdamHorowitzLaw.com (law firm blog)
March 7, 2020
Increasingly, venerable institutions like the Boy Scouts, the USA Gymnastics and Catholic dioceses say they are going into bankruptcy because of child sex abuse and cover up lawsuits.
So maybe it’s time to re-think those suits and the laws that enable them?
To put it bluntly, that’s a crazy idea. Bear with us as we explain.
For starters, let’s look more closely at why big non-profits like this sometimes seek Chapter 11 protection.
Are they being “forced to” (as some headline writers suggest)? Or are they doing so for selfish reasons?
Our bet is the latter.
Most who declare bankruptcy do so because it’s undeniable that their expenses have and may continue to rise. Why? Because they’ve been and sometimes still are short-sighted and selfish regarding abuse.
But look at these crystal-clear facts about the hierarchies of these institutions..
–Most of the costs of these lawsuits are covered by insurance. In other words, these institutions have ALREADY paid out because of abuse, on the front end.
(USA Today last week reported “The Boy Scouts expect insurance will cover ‘a substantial portion’ of the money owed to victims, according to a court filing.)
–Every day, Scouting and church officials are still bringing in dollars (donations, bequeaths, rents, investments).
–There’s no solid way to predict whether that income will go up or down. (Many organizations end up stronger if they deal with abuse scandals well.)
–There’s no real way to predict how many victims will sue.
–And there’s no way to predict how those lawsuits will turn out.
–When some bishops have faced abuse litigation, they’ve boosted their income by selling property, getting loans or taking similar steps.
So one must ask: are these institutions seeking Chapter 11 status because they HAVE TO or because they WANT TO.
Again, we strongly suspect the latter.
Some find this notion hard to believe. “Bankruptcy is embarrassing and time-consuming,” they say.
It may be. But consider the alternative.
A bankruptcy filing stops litigation. No more documents turned over to victims’ or their attorneys. No more depositions. No testimony in open court that reveals how much officials knew about abuse and how little they did to stop abuse. No more tough questions under oath. No more having to face a deeply wounded victim or victims across a conference room table or in a courthouse.
That’s what is BEYOND embarrassing for those who suspected but hid or ignored heinous crimes against kids. THAT’S what they’re really afraid of and worried about.
Others claim “Bankruptcy means you have to turn over your files and finances for a judge to examine, and who’d want to do that?”
Again, that may be true. But bankruptcy judges look at files about assets, not abuse. Bankruptcy court shifts the focus entirely, away from “Who hid crimes?” and toward “Who gets money?”
So keep in mind that we all have choices, especially the CEOs and CFOs and bishops and other honchos who have big salaries and impressive titles AND who enabled predators to hurt kids.
They can choose to safeguard their careers and reputations, and hide behind the protections offered by Chapter 11.
Or they can choose to safeguard the innocent, help the wounded and let the truth come out in court.
Don’t believe them when they claim “We have no choice but to declare bankruptcy.. . .”