January 14, 2020

Boy Scouts of America Bankruptcy Plan May Not Be Enough to Pay Back Abuse Victims as They Deserve, Lawyers Claim

Experts say the Boy Scouts of America bankruptcy plan may seem like it’s enough to pay back Scouting abuse victims, but that could quickly prove to be false. Based on how the organization plans to protect its assets, victims may get less than they deserve.

Over the last few years, hundreds of men have stepped forward testifying they were sexually abused by leaders in the Boy Scouts. These Scouting abuse survivors claim not only that they molested as children but that the BSA covered the tracks of abusers in the Scouts. Now, ex-Scouts across the country are filing seeking justice for their abuse by suing the BSA for negligence.

In response to the waves of lawsuits putting a stress on the organization's finances, the BSA announced its consideration of filing for bankruptcy in 2018. Filing for Chapter 11 bankruptcy would allow Boy Scouts to review and reorganize the organization to address claims. However, it would also drastically shorten the time abuse victims have to file claims against the BSA.

Though the Boy Scouts have not announced their plan to file for Chapter 11 yet, the organization created a strategy to help cope with the waves of lawsuits. The Wall Street Journal reports the Boy Scouts tentatively plan to file a bankruptcy covering their national governing body and create a compensation trust. However, 261 of their local councils would be excluded from the bankruptcy.

"By placing the national organization but not the local councils into bankruptcy and funneling sexual-abuse claims to a compensation trust, the Boy Scouts are following a strategy of religious nonprofits that moved through bankruptcy over the past 15 years and limited the assets available to creditors using trusts, separately incorporated entities and other financial devices," Andrew Scurria, Andrea Fuller and Peg Brickley for the Wall Street Journal report.

While this strategy has been widely used, lawyers representing Scouting abuse victims say there isn't enough money to properly fund the trust, not without using the assets of the local councils.

Local BSA councils are their own entities and nonprofits. Each has their own properties, boards, investments, etc. While some the Boy Scouts of America bankruptcy plan would prevent victims from collecting recovery from local councils, attorney Tim Kosnoff says "there is an extremely compelling argument" that local council assets cannot be withheld from Scouting abuse victims.

“The bankruptcy court is going to have to resolve this issue, which is, are those assets available to pay the claims of creditors?” Kosnoff said to the Wall Street Journal. “I feel more confident in our argument than in theirs.”

To read the Wall Street Journal's full article, click here.


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