Tort Claimants' Committee for Boy Scouts of America Bankruptcy Rejects Fifth Amended Plan of Reorganization

LOS ANGELES, Sept. 15, 2021 /PRNewswire/ -- On September 15, 2021, the Official Tort Claimants' Committee (TCC) in the chapter 11 bankruptcy of the Boy Scouts of America (BSA) announced that it does not support the BSA's Fifth Amended Plan of Reorganization, filed today. The TCC, represented by Pachulski Stang Ziehl & Jones LLP (PSZJ), views the Plan as grossly unfair to the 82,500 survivors who were sexually abused as children. The TCC was appointed by the Office of the United States Trustee as the official representative for all survivors of childhood sexual abuse and it will not sell out survivors for a quick pay that does not deliver the justice they deserve.

The TCC calls attention to at least three major flaws contained in the BSA's Plan. First, the Plan includes settlements with local councils that leave them with billions of dollars of cash and property in excess of their current need to fulfill the mission of Scouting, especially in light of the significant declines in Scouting membership that the Boy Scouts' Plan does not project to improve in any meaningful way. Second, chartered organizations are not paying for the broad releases of sexual abuse claims. Instead, the TCC maintains that chartered organizations are being handed a "get-out-of-jail-free card" in exchange for a transfer of their interest in the insurance policies that were purchased by the BSA. Third, the BSA and local councils paid substantial sums to the insurance carriers in annual premiums for decades to cover the sexual abuse claims. The TCC takes issue with the free ride given to insurers by having them pay for only a small fraction of the coverage they are contractually obligated to provide.

The TCC originally supported a settlement with the local councils in the amount of $600 million because the BSA and the "Coalition of Abused Scouts for Justice" confirmed that the primary value for survivors would be recovered through the billions in available insurance coverage. However, over the past two months, the BSA and the Coalition have changed their course and are now seeking a quick exit from the bankruptcy case by entering into settlements with the insurance carriers that fail to capture the billions in value they promised would pay the sexual abuse claims of survivors.

"The Tort Claimants' Committee investigated the assets and liabilities of all 251 local councils. That analysis shows the local councils have the ability to fairly compensate survivors without jeopardizing the Scouting mission," said John Humphrey, Chairman of the TCC. "As Chairman of the TCC, I cannot in good conscience support the release of 251 local councils who were on the front lines of decades of childhood sexual abuse. Local councils should not be allowed to keep billions of dollars of cash, investments, and real estate that is far in excess of what they need for Scouting while leaving survivors woefully undercompensated."

"The Boy Scouts are handing out releases like Halloween candy because the chartered organizations are threatening to revoke their future financial support of the Boy Scouts and local councils," said PSZJ's James Stang, counsel to the TCC. "As a result, the chartered organizations are not paying a penny for the childhood sexual abuse that occurred under their roof. Instead of holding the chartered organizations accountable, survivors are being forced to release the chartered organizations in exchange for nothing more than an assignment of insurance policies that were provided by and paid for by the BSA."

"As each month passes in this bankruptcy case, the Boy Scouts' Plan becomes less about the survivors and more about how the Boy Scouts will exit bankruptcy at the expense of survivors," added Doug Kennedy, Vice Chair of the TCC. "It will be up to the Tort Claimants' Committee to continue advancing the interests of survivors because the Boy Scouts, local councils, chartered organizations, and their insurers are unwilling to do the work necessary to reach a resolution that is fair to survivors."

The Plan includes a $250 million settlement with The Church of Jesus Christ Latter Day Saints, which had direct involvement in every aspect of the Scouting program. If approved, the proposed settlement yields an average $3,000 payment for each claim, an amount far below its responsibility.

Likewise, Hartford Insurance Company is not paying amounts commensurate with its coverage risk. Hartford increased its inadequate offer of $650 million to an equally subpar offer of $787 million. Hartford's new offer yields an average of less than $7,500 per survivor.

"In a case where half of the abuse includes multiple instances of penetration and masturbation of children, payments in the range of $10,000 - $12,000 do not begin to justly compensate survivors," said Mr. Stang. "The Tort Claimants' Committee will oppose the Boy Scouts' Plan and any settlements that fail to compensate survivors fairly."

More information on the restructuring can be found at https://www.pszjlaw.com/creditor-125.html.

SOURCE Pachulski Stang Ziehl & Jones