The path to emerging from bankruptcy continues for the Boy Scouts of America, and in the most recent development, the presiding judge has approved the extension of an injunction meant to halt Boy Scout abuse claims from being filed against local councils until Nov. 16. This is also the cut-off date for victims to file claims against the national organization.

The Star Tribune reports that, since the 1920s, more than 12,000 boys were abused by 7,800 abusers. There may be an estimated 7,000 Boy Scouts abuse claims brought as a part of the bankruptcy case.

Boy Scouts Abuse Claims and Bankruptcy

As abuse allegations mounted against the organization, the Boy Scouts of America filed Chapter 11 bankruptcy in February 2020, according to National Public Radio (NPR). Chapter 11 involves a business or entity creating a debt reorganization plan in order to stay in business while paying its debts over time. As a part of the process, the organization must create a trust to provide compensation to those making substantiated Boy Scouts abuse claims.

For many years, the national organization used insurance to cover sexual abuse claims, but they lost that coverage when insurance carriers began claiming the Boy Scouts were withholding information from them. Now, the Scout’s may potentially be held liable for millions of dollars worth of damages to abuse victims. In just one case in 2010, the organization was ordered to pay $20 million, according to NPR.

National vs. Local Boy Scouts Abuse Claims

The San Diego Union-Tribune reports that as a part of the bankruptcy negotiations, victims’ advocates agreed to a Nov. 16 deadline for those wishing to file Boy Scouts abuse claims against the national organization. This means that some victims may be forced to choose between filing before they’re ready, not filing at all, or filing against a local Boy Scouts council.

Legally, the national organization of the Boy Scouts is separate from its local councils. This means that these councils aren’t protected by the bankruptcy filing and may face litigation after the cutoff. The risk posed by filing against local councils, however, is that they may try to defend themselves by deflecting blame onto the bankruptcy-protected national organization.

Filing Boy Scouts Abuse Claims

There is currently an injunction in place halting Boy Scouts abuse claims being filed against local councils. Judge Laurie Selber Silverstein recently approved an extension of that injunction until Nov. 16. In order to qualify for this protection, councils will need to sign agreements by July 6 and provide information regarding their finances and real estate holdings to the national organization.

This information will then be shared with creditor committees. It’s likely that victims’ attorneys will go after these assets to contribute to the victims’ compensation fund.

Currently, the only way to file Boy Scouts abuse claims is to bring them against the national organization or unprotected local councils. However, if the injunction remains in place, claims may be brought at the local level again after Nov. 16., at which point claims against the national organization will be halted.

Boy Scouts Bankruptcy Mediation

In an attempt to resolve issues through mediation rather than costly litigation, a three-person mediation panel was appointed by Judge Silverstein. The panel includes two mediators chosen by the Boy Scouts, while the judge chose the third appointee: former bankruptcy judge Kevin Carey. The other mediators include Paul Finn, a mediator with significant experience in Catholic Church abuse scandal cases, and Tim Gallagher, a California attorney specializing in mediation.

Disputes expected to be settled by the panel include those over whether or not certain Boy Scout property should be subject to creditor claims.

“The debtors should not be forced to monetize those assets to satisfy the claims of creditors,” Boy Scouts attorney Jessica Boelter told the Star Tribune.

This article is not legal advice. It is presented
for informational purposes only.