Last Tuesday morning, The Boy Scouts of America filed a Chapter 11 bankruptcy protection. Chapter 11 bankruptcy is considered to be a reorganization plan that is used by large businesses to help them stay active while they are repaying creditors.
What We Know:
- The BSA intends to use the Chapter 11 as a way to create a Victim’s Compensation Trust, to provide equitable compensation to victims.
- The Boy Scouts said that only the national organization has filed for Chapter 11, and the local councils that provide programming and other services are financially independent.
- BSA’s president and chief executive officer Roger Mosby said in a statement Tuesday, “the BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in Scouting. We are outraged that there have been times when individuals took advantage of our programs to harm innocent children…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.”
- Michael Pfau whose Seattle-based law firm, Pfau, Cochran, Veretis and Amala, represents about 300 clients who say they were abused as scouts in 30+ states. Pfau said, “it will be far larger in terms of the numbers of victims and far more complicated than any of the bankruptcies we’ve seen so far involving the Catholic Church…Those bankruptcies involved individual dioceses or archdioceses. This involves victims from all 50 states and several U.S. territories…You’re looking at thousands of abuse survivors making claims,” he said. “This is much bigger than the bankruptcy filings involving the Catholic Church.”
- In 2018, the BSA telegraphed that they hired the law firm Sidley Austin LLP and said that they were “working with experts to explore all options available to ensure that the local and national programming of the Boy Scouts of America continues uninterrupted.”
- According to Pfau, now that the organization has filed for bankruptcy, the U.S. Trustees Office will pick a creditor committee that will include a number of abuse victims. The committee will, in turn, hire a bankruptcy law firm that will represent the interests of creditors in negotiations with the BSA. Pfau also said “the various cases against the BSA has been filed in state courts it will be transferred to federal bankruptcy court for adjudication”.
- The organization said last Tuesday that the Scouting is safer than its ever been, “approximately 90% of pending and asserted abuse claims against the BSA relate to abuse that occurred more than 30 years ago.”
Founded in 1910, BSA reported in 2016 that the organization had more than 1.26 million Cub Scouts with 830,000 Boy Scouts and about 960,000 adult volunteers.