Boy Scouts bankruptcy plan in effect; appeals likely to go on

DOVER, Del. — The Boys Scouts of America’s $2.4 billion bankruptcy reorganization plan took effect Wednesday. But more time will be needed before survivors of child sexual abuse at the hands of Boy Scout leaders and volunteers begin receiving compensation.

The plan became effective when the Third U.S. Circuit Court of Appeals denied a request by the plan’s opponents to issue a stay while they appeal a federal district court’s approval of the plan. The denial of the stay means the plan can formally take effect, but opponents are expected to continue to pursue their appeal.

“This is a significant milestone for the BSA as we emerge from a three-year financial restructuring process with a global resolution approved with overwhelming support of more than 85% of the survivors involved in the case,” Boy Scouts CEO and President Roger Mosby said in a prepared statement.

Doug Kennedy, co-chairman of the bankruptcy’s official committee of abuse claimants, said survivors can now “take an important step toward a degree of resolution for their abuse.”

The plan allows the Texasbased Boy Scouts to keep operating while compensating tens of thousands of men who say they were sexually abused as children. More than 80,000 men have filed claims. The plan’s opponents have argued that the staggering number of claims, when combined with other factors, suggests the bankruptcy process was manipulated.

With the plan taking effect, assets will begin flowing gradually into a settlement trust that will evaluate claims and distribute payments to abuse survivors. Retired Texas federal bankruptcy judge Barbara Houser, who will oversee the trust, can begin hiring advisers, but it likely will be at least several months before any abuse survivors begin receiving payments.

Meanwhile, U.S. Bankruptcy Judge Laurie Selber Silverstein held a hearing Wednesday to consider requests that the Boy Scouts be allowed to pay more than $20 million in legal fees and expenses of attorneys for a coalition of law firms representing those who claim to have been abused. Those law firms are expected to take roughly 40% of any payments to clients from the trust.

Nevertheless, attorneys for the Coalition of Abused Scouts for Justice argued that Silverstein should grant their “relatively modest” request that the Boy Scouts of America pay a portion of their fees because of the “extraordinary contribution” they made in developing a reorganization plan.