Boy Scouts file for bankruptcy due to sex-abuse lawsuits

[Muda69]

https://apnews.com/d65e98062be130ceeb73a2581cc21d3f

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Barraged by hundreds of sex-abuse lawsuits, the Boy Scouts of America filed for bankruptcy protection Tuesday in hopes of working out a potentially mammoth victim compensation plan that will allow the 110-year-old organization to carry on.

The Chapter 11 filing in federal bankruptcy court in Wilmington, Delaware, sets in motion what could be one of the biggest, most complex bankruptcies ever seen. Scores of lawyers are seeking settlements on behalf of several thousand men who say they were molested as scouts by scoutmasters or other leaders decades ago but are only now eligible to sue because of recent changes in their states’ statute-of-limitations laws.

By going to bankruptcy court, the Scouts can put those lawsuits on hold for now. But ultimately they could be forced to sell off some of their vast property holdings, including campgrounds and hiking trails, to raise money for a compensation trust fund that could surpass a billion dollars.

The bankruptcy petition listed the Boy Scouts’ assets as between $1 billion and $10 billion, and its liabilities at $500 million to $1 billion.

“Scouting programs will continue throughout this process and for many years to come,” the Boy Scouts said in a statement. ”Local councils are not filing for bankruptcy because they are legally separate and distinct organizations.”

The Boy Scouts are just the latest major American institution to face a heavy price over sexual abuse. Roman Catholic dioceses across the country and schools such as Penn State and Michigan State have paid out hundreds of millions of dollars in recent years.

The bankruptcy represents a painful turn for an organization that has been a pillar of American civic life for generations and a training ground for future leaders. Achieving the rank of Eagle Scout has long been a proud accomplishment that politicians, business leaders, astronauts and others put on their resumes and in their official biographies.

The Boy Scouts’ finances have been strained in recent years by declining membership and sex-abuse settlements.

The number of youths taking part in scouting has dropped below 2 million, down from more than 4 million in peak years of the 1970s. The organization has tried to counter the decline by admitting girls, but its membership rolls took a big hit Jan. 1 when The Church of Jesus Christ of Latter-day Saints — for decades a major sponsor of Boy Scout units — cut ties and withdrew more than 400,000 scouts in favor of programs of its own.

The financial outlook had worsened last year after New York, Arizona, New Jersey and California passed laws making it easier for victims of long-ago abuse to file claims. Teams of lawyers across the U.S. have been signing up clients by the hundreds to sue the Boy Scouts.

Most of the newly surfacing cases date to the 1960s, ’70s and ’80s; the organization says there were only five known abuse victims in 2018. The Boy Scouts credit the change to an array of prevention policies adopted since the mid-1980s, including mandatory criminal background checks and abuse-prevention training for all staff and volunteers, and a rule that two or more adult leaders be present during all activities.

In many ways, the crisis parallels the one facing the Catholic Church in the U.S. Both institutions boast of major progress over recent decades in combating abuse. whether by priests or scout leaders, but both face many lawsuits alleging negligence and cover-ups, mostly decades ago.

“We are outraged that there have been times when individuals took advantage of our programs to harm innocent children,” said Roger Mosby, the BSA’s president and CEO. “While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process, with the proposed trust structure, will provide equitable compensation to all victims while maintaining the BSA’s important mission.”

The BSA said it is encouraging all victims to come forward to file a claim in the case. A deadline for filing claims has not yet been set by the bankruptcy court, but the BSA said that would likely happen later this year.

Among other matters to be addressed in bankruptcy court: the fate of the Boy Scouts’ assets; the extent to which the organization’s insurance will help cover compensation; and whether assets of the Scouts’ 261 local councils will be added to the fund.

“There are a lot of very angry, resentful men out there who will not allow the Boy Scouts to get away without saying what all their assets are,” said lawyer Paul Mones, who represents numerous clients suing the BSA. “They want no stone unturned.”

Amid the crush of lawsuits, the Scouts recently mortgaged the major properties owned by the national leadership, including the headquarters in Irving, Texas, and the 140,000-acre Philmont Ranch in New Mexico, to help secure a line of credit.

Founded in 1910, the Boy Scouts have kept confidential files since the 1920s listing staff and volunteers implicated in sexual abuse, for the avowed purpose of keeping predators away from youth. According to a court deposition, the files as of January listed 7,819 suspected abusers and 12,254 victims.

Until last spring, the organization had insisted it never knowingly allowed a predator to work with youths. But in May, The Associated Press reported that attorneys for abuse victims had identified multiple cases in which known predators were allowed to return to leadership posts. The next day, Boy Scouts chief executive Mike Surbaugh wrote to a congressional committee, acknowledging the group’s previous claim was untrue.

James Kretschmer of Houston, among the many men suing for alleged abuse, says he was molested by a Scout leader over several months in the mid-1970s in the Spokane, Washington, area. Regarding the bankruptcy, he said, “It is a shame because at its core and what it was supposed to be, the Boy Scouts is a beautiful organization.”

“But you know, anything can be corrupted,” he added. “And if they’re not going to protect the people that they’ve entrusted with the children, then shut it down and move on.”

Ahead of the Chapter 11 filing, lawyers said that because of the organization’s 50-state presence, as well as its ties to churches and civic groups that sponsor scout troops, a bankruptcy by the Boy Scouts would be unprecedented in its complexity. It would be national in scope, unlike the various Catholic Church bankruptcy cases, which have unfolded diocese by diocese.

“A Boy Scout bankruptcy would be bigger in scale than any other child abuse bankruptcy we’ve ever seen,” said Seattle-based attorney Mike Pfau, whose firm is representing scores of men nationwide alleging they were abused as Boy Scouts.

A sad day, but most individuals working for and volunteering within the organization knew this was a foregone conclusion.  If the assets of the local Scout Councils are brought into this bankruptcy filing it will most likely be the death knell of the BSA.  Many councils will fold, and even the larger more financially secure councils will have to make significant cutbacks, sell properties, and raise fees, which many families simply can no longer afford.

National BSA website concerning the bankruptcy:  https://www.bsarestructuring.org/

 

[Bobref]

Corporate natural selection at work.

[Muda69]

Boy Scout councils under pressure to share sex abuse costs

https://apnews.com/631802bb21ab011790a187f6ff486190

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Nine sex abuse lawsuits were filed Tuesday in New York against three Boy Scout local councils, signaling an escalation of efforts to pressure councils nationwide to pay a big share of an eventual settlement in the Scouts’ bankruptcy proceedings.

The lawsuits were filed shortly after an easing of coronavirus lockdown rules enabled courts in some parts of New York to resume the handling of civil cases.

One of the lawyers coordinating the filing, Mike Pfau, said his Seattle-based firm expects to file scores more lawsuits in other parts of New York, as well as in New Jersey and California, after full reopening of courts there.

Two other firms, Oregon-based Crew Janci LLP and Chicago-based Hurley McKenna & Mertz, said they had similar plans, indicating there could be hundreds of such lawsuits altogether.

At least through June 8, an injunction issued by the bankruptcy judge, Laurie Selber Silverstein, blocks the lawyers from proceeding with lawsuits against the local councils. But several lawyers said they will press for the injunction to be lifted unless the councils’ financial information is fully disclosed and they agree to contribute significantly to a proposed victim compensation fund.

“The local councils are required to make a substantial contribution,” said Stephen Crew, of Crew Janci. “If they don’t, the plan won’t be approved.”

The Boy Scouts of America filed for Chapter 11 bankruptcy protection in February in hopes of surviving a barrage of lawsuits, many of them made possible by recent changes in state laws to allow people to sue over long-ago sexual abuse.

Proceedings are underway at federal bankruptcy court in Delaware aimed at creating a compensation fund for thousands of men molested as youngsters decades ago by scoutmasters or other leaders.

In its bankruptcy filing, the BSA said the 261 local councils, which have extensive property holdings and other assets, are separate legal entities and should not be included as debtors in the case.

The councils are represented by an ad hoc committee in the proceedings, and negotiations are in progress over disclosure of their assets and records as a step toward determining their contributions to the compensation fund.

Pfau said he was skeptical the councils would agree to contributions large enough to forestall lawsuits against them.

The lawsuits filed Tuesday involve allegations of abuse from men who were Scouts decades ago in local councils in upstate New York that have subsequently merged into the Leatherstocking Council, the Baden-Powell Council and the Seneca Waterways Council.

Leaders of those three councils declined to comment on the new lawsuits. Two of them referred inquiries to BSA headquarters, which issued a statement reiterating its goal of fairly compensating abuse survivors while preserving the Boy Scouts’ mission.

“We are working with and actively encouraging the ad hoc committee, councils, and attorneys representing survivors of abuse to find a solution that will appropriately fund a trust, while also ensuring the future of Scouting,” the statement said

Lawyer Tim Kosnoff, whose Abused in Scouting legal team says it’s representing 3,200 clients in the bankruptcy case, estimated that the local councils possess roughly 80% of total Boy Scouts assets, compared with about 20% for the Texas-based national office.

Kosnoff said he worries some local councils might try to transfer assets in a way that would put them out of reach of bankruptcy proceedings; he wants Silverstein to prohibit that.

It’s not yet known how many claimants there will be in the bankruptcy case. Some lawyers say the number could approach 10,000 by Nov. 16, the deadline that was set Monday for abuse victims to file claims.

More than 12,000 boys have been molested by 7,800 abusers since the 1920s, according to Boy Scout files revealed in court papers. Most of the more recent cases date to the 1960s, ’70s and ’80s, before the Boy Scouts adopted mandatory criminal background checks and abuse prevention training and protocols for all staff and volunteers.

Christopher Hurley, managing partner of Hurley McKenna & Mertz, said there were divisions within the ranks of the local councils, with some amenable to ensuring full disclosure of assets and records, and others balking at doing so. The BSA national organization had access to the key data and the authority to make it available to plaintiffs’ attorneys, he said.

“The local councils can choose how they want to participate,” he said. “They can do it in state court, or they can do it with the bankruptcy process. As far as we’re concerned, the time for delay is over.”

New York, New Jersey and California were the most populous states acting last year to modify statute-of-limitations law so people, for a limited period of time, could sue over long-ago sex abuse.

Jason Amala, a law partner of Mike Pfau’s, said they felt an obligation toward some of their clients to sue in New York before the state’s window closed, possibly in mid-August.

“Our clients will not agree to an extension past June 8 unless the local councils start producing the records we need,” Amala said. “The clock is ticking.”

Kind of saw this coming.  If the assets of local councils across the country are pulled into this it will effectively be the end of the BSA.  They don't have deep, deep pockets like the Roman Catholic Church.

 

[swordfish]

Maybe they could ask the Girl Scouts to help?

[gonzoron]

1 hour ago, swordfish said:

Maybe they could ask the Girl Scouts to help?