The Boy Scouts of America organisation has sought to seal an $850 million settlement in an ongoing hearing before US Bankruptcy Judge Laurie Selber Silverstein in Wilmington which relates to historic sex abuse claims.
During a virtual hearing, the Boy Scouts’ legal representative argued that the $850 million settlement was the organisation’s best chance of distributing compensation to survivors and keeping the organization’s mission intact.
The deal is supported by groups representing 70,000 sex abuse claimants and 250 local councils. The organization has apologized and said it is committed to fulfilling its “social and moral responsibility to equitably compensate survivors.”
It said when it filed for bankruptcy in February 2020 that it knew “nothing can undo the tragic abuse that victims suffered” and believed the bankruptcy process was the best way to address the claims.
If the judge approves the deal, the Boy Scouts will be able to move forward with a proposed reorganisation plan that would allow it to exit bankruptcy by the end of the year.
The accord is opposed by insurers and many chartered organizations that fund local Scouting units and events.
Daniel Shamah of O’Melveny & Myers, representing insurer Century Indemnity Co, argued earlier this week that the deal should, but does not, meet certain legal standards of fairness because of potential conflicts involving the local councils that signed the deal.
Shamah said some of the local councils facing abuse-related claims had too much influence in negotiating the settlement. The Boy Scouts board that negotiated the deals included members elected by local councils or who had ties to local councils, he said.
Michael Rosenthal of Gibson Dunn & Crutcher, representing AIG affiliates, also took issue during the hearing with a provision of the agreement that effectively requires any future settlement with chartered organizations to be approved by all parties to the existing deal.
Chartered organizations are not part of the current agreement.
He also argued that the Boy Scouts’ board didn’t properly consider the settlement, noting that it didn’t issue a board resolution accepting the deal.
The settlement is also opposed by Hartford Financial Services Group Inc, which argued that the Boy Scouts cannot back out of a deal it struck with the insurer earlier this year but abandoned when the abuse claimants said they would not support it.
The case is In re Boy Scouts of America, U.S. Bankruptcy Court, District of Delaware, No. 20-10343.