More changes made to Boy Scouts of America bankruptcy plan

DOVER, Del. — The latest bankruptcy plan filed by the Boy Scouts of America increases the contributions from the BSA and its local councils to a proposed trust fund for child sex abuse victims while appearing to back away from a controversial settlement with one of the BSA’s insurers.

Under a revised plan submitted late last week, the Boy Scouts are offering to issue an $80 million unsecured promissory note to a trust fund for abuse victims. The BSA also is proposing to use restricted assets to help cover post-bankruptcy operational expenses, which would make up to $50 million in unrestricted cash available for abuse survivors. With the changes, the BSA’s proposed contribution to the trust fund would increase from about $120 million under a previous plan to as much as roughly $250 million.

The BSA also said its local councils would contribute $500 million into the fund for abuse victims, up from $425 million offered in the previous plan. The new proposal calls for the councils to contribute $300 million in cash and the remainder in property with a combined appraised value of $200 million.

The BSA, its 250 or so local councils and hundreds of sponsoring organizations such as churches and civic groups would be released from further liability in exchange for contributions to the trust fund and the transfer of insurance rights.

In a prepared statement, the Boy Scouts described the revised plan as “a significant step” toward a global resolution of abuse claims.

“The BSA is hopeful that this plan, or one very similar to it, will have the support of a supermajority of survivors,” the organization said.

A hearing regarding the latest proposal is scheduled for July 20.

Meanwhile, the Boy Scouts appear to be backing way from a previously announced settlement in which one of the group’s insurers, The Hartford, agreed to pay $650 million into the victims trust in exchange for being released from any further obligations under policies dating to 1971. The agreement allows The Hartford to pay a lesser amount if the BSA or the settlement trust reaches an agreement with another major BSA insurer, Century Insurance Group, and Century’s settlement amount is less than two times The Hartford’s, or $1.3 billion.

The Hartford settlement was roundly criticized by attorneys for abuse victims, who estimate the insurer’s liability exposure at several billion dollars.

“We see dropping Hartford as a positive,” Jim Stang, an attorney for the official committee representing abuse victims, said Monday.

The BSA acknowledged in last week’s court filing that it can’t win support for a global resolution of the sex abuse claims that drove the organization into bankruptcy if the Hartford settlement is included in its plan. Attorneys representing the official committee, a plaintiffs group called the Coalition of Abused Scouts for Justice, and potential future abuse claimants told BSA lawyers in a letter two weeks ago that abuse survivors would not, “under any circumstances,” support any plan that includes the Hartford settlement.

“It appears the global resolution plan cannot be confirmed to the extent it includes the Hartford insurance settlement agreement unless modifications are made … that are agreeable to the holders of direct abuse claims,” BSA attorneys wrote.

Attorneys for the Boy Scouts indicated that they would ask the bankruptcy judge at next month’s hearing if they are obligated to further pursue the settlement with The Hartford, which requires court approval, given the universal opposition from abuse victims. If not, BSA lawyers intend to drop the settlement from the plan.

The Boy Scouts of America, based in Irving, Texas, sought bankruptcy protection in February 2020, moving to halt hundreds of lawsuits and create a compensation fund for men who were molested as youngsters decades ago by scoutmasters or other leaders.

Attorneys for abuse victims have said they would go after properties and assets owned by the BSA’s local councils. The councils, which run day-to-day operations for local troops, are considered legally separate entities by the Boy Scouts, even though they share insurance policies and are considered “related parties” in the bankruptcy.

Attorneys for the Boy Scouts have said that between $2.4 billion and $7.1 billion, including insurance rights, might be available for abuse victims. The official victims committee, which is known as the tort claimants committee and is charged with acting as a fiduciary for all abuse victims, estimates the value of some 82,500 sexual abuse claims at about $103 billion.