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U.S. judge rejects parts of Boy Scouts' $2.7 billion sex abuse deal

[July 30, 2022] By Dietrich Knauth

(Reuters) -A U.S. judge on Friday rejected key aspects of the Boy Scouts of America's reorganization plan and its underlying sex abuse settlement, delaying the national youth organization's ability to emerge from bankruptcy.

U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware, ruled she could not approve all aspects of the plan and settlement, which would establish a $2.7 billion trust to compensate more than 80,000 men who say they were sexually abused as children by troop leaders.

While the ruling blocks the settlement from moving forward as is, the Boy Scouts organization called it a "significant milestone" in the case. Silverstein approved most aspects of the settlement framework, while overruling many objections to the deal, the Boy Scouts said.

"We are committed to working with all constituents to make the necessary changes required by the ruling to drive this process forward and we remain optimistic about securing approval of a final Plan as soon as possible," the Boy Scouts of America said in a statement.

The Coalition of Abused Scouts for Justice, which represents many victims in the bankruptcy case, said the decision would protect future Scouts from abuse.

“Throughout this case, what we’ve heard time and again from survivors is that it’s not only about the money, because no amount of money in the world will make up for being sexually abused as a child," the coalition said in a press release.

Ricky Mason, an attorney representing local Boy Scouts councils in the case, said he was pleased that Silverstein's decision recognized "the importance of both bringing closure to survivors and preserving the Scouting mission through the global settlement," even if she did not outright approve the current restructuring plan.

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The Boy Scouts of America signage is pictured at its headquarters in Irving, Texas, February 5, 2013. REUTERS/Tim Sharp/File Photo

Silverstein approved many aspects of the settlement, but wrote she could not approve a $250 million settlement between the Boy Scouts and the Church of Jesus Christ of Latter-day Saints, and could not make determinations related to the Boy Scouts' insurance coverage.

The judge suggested the overall deal was going to take significant time to rework, writing that the Boy Scouts "have some decisions to make."

Silverstein's ruling follows more than two years of Chapter 11 proceedings for the youth group, which filed for bankruptcy in February 2020 after being hit by a flood of sexual abuse lawsuits when several U.S. states passed laws allowing accusers to sue over allegations dating back decades. Since the outset of the case, more than 82,000 abuse claims have been filed.

Those claimants became creditors of the organization, who had to sign off on any plans to restructure and exit bankruptcy.

The amount of money claimants stood to gain from the $2.7 billion trust would depend on the severity of the alleged abuse, as well as where and when it occurred, among other factors. Claimants could receive as little as $3,500 or up to $2.7 million for the most severe cases, according to court papers.

The Boy Scouts has apologized and said the organization is committed to fulfilling their "social and moral responsibility to equitably compensate survivors."

(Reporting by Dietrich Knauth; Editing by Sandra Maler, Daniel Wallis and William Mallard)

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