By RANDALL CHASE, Associated Press
DOVER, Delaware (AP) – Protecting local Boy Scouts of America councils and troop sponsor organizations from future liability for child sex abuse claims is critical to the national group’s reorganization plan, attorneys for the BSA told a Delaware bankruptcy judge Tuesday.
Lawyers opposing the plan countered that indemnification for non-culpable third parties was neither fair nor necessary and violated the right of abuse survivors to seek compensation for their abuse.
The Boy Scouts, based in Irving, Texas, filed for bankruptcy protection in February 2020 to drop hundreds of individual lawsuits and create a settlement foundation for abuse victims. Although the organization was facing approximately 275 lawsuits at the time, more than 82,000 sexual abuse lawsuits were filed in the bankruptcy proceedings.
The restructuring plan calls for the Boy Scouts and their 250 local councils, along with insurance companies and troop sponsor organizations, to contribute about $2.6 billion in cash and property and cede their insurance rights to an abuse survivor trust. More than half of that money would come from the BSA’s two largest insurers, Century Indemnity Co. and The Hartford. These companies would contribute $800 million and $787 million, respectively.
In exchange, the contributing parties to the Settlement Trust would be relieved of further liability for decades-old sex abuse claims.
The local BSA councils are not debtors of the bankruptcy, but Boy Scouts attorney Jessica Lauria argued that they were intrinsically tied to the national organization and deserved protection from future lawsuits in exchange for a contribution to the settlement fund.
“There is no doubt that there is an identity of interest and, quite frankly, an extreme interdependence between the local councils and the national organization,” Lauria said. Sponsorship organizations are similarly closely linked to the BSA and local governments and are vital to their operations, she added.
Richard Mason, an attorney for the councils, told Judge Laura Selber Silverstein that without the liability releases, the settlement fund “essentially evaporates.”
Without the BSA plan’s approval, local councils would face “massive litigation” and be forced to file for bankruptcy protection themselves, jeopardizing the future of Scouting and the ability of abuse survivors to receive compensation, Mason added.
However, opponents questioned why the liability releases for local councils and sponsoring organizations are necessary for the BSA to emerge from bankruptcy. They noted that last year the Scouts proposed a plan whereby the settlement fund would be funded only by the national organization and only for claims against them. Under this plan, councils and local sponsoring organizations would make no contribution and would have no protection from liability for abuse claims.
“The debtors said it was practical, doable,” Silverstein noted. “So why is it necessary to have this elaborate, interconnected, intertwined plan for the Boy Scouts?”
Lauria responded that a “BSA-only plan” might have been feasible when it was first proposed, but that it was never “optimal.” She also noted that BSA has since spent about $100 million more on bankruptcy fees and cannot afford to fund a settlement fund alone at this time.
Edwin Caldie, an attorney representing numerous alleged abuse victims in Guam, argued that the BSA’s current plan unfairly deprives them of their right to bring abuse charges against Catholic church officials.
The Guam group includes creditors with claims against the Archdiocese of Agana, which filed for bankruptcy protection in 2019 amid a spate of child sex abuse lawsuits. Many of these claims relate to the late priest Louis Brouillard, who was also a BSA Scoutmaster and has been accused of molesting more than 100 children.
The BSA plan would channel claims against the Diocese of Guam into the proposed BSA Settlement Fund without the consent of survivors and unfairly deprive them of the ability to pursue BSA insurance policies, Caldie said.
Caldie accused the affiliated insurers of using “extortionate” tactics in negotiations with the Boy Scouts to obtain indemnities they were not entitled to under the policies they issued.
He also dismissed the notion that a relatively small number of survivors should not be allowed to interfere in approving a reorganization plan supported by tens of thousands of other proposers.
“From a common-sense perspective, the BSA made the decision to shun and silence child sexual assault survivors for decades and not report their perpetrators for decades,” Caldie said. “…The survivors of Guam are not particularly comfortable now with ‘bigger good’ arguments, especially not to buy the BSA.”
Final arguments on whether the judge should approve the BSA plan are expected to conclude on Wednesday.
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