Group gets conditional approval of $850M bankruptcy deal

A bankruptcy judge Thursday approved a proposal by the Boy Scouts of America to enter into an agreement that includes an $850 million fund to compensate tens of thousands of men who say they were sexually abused as youngsters by scout leaders.

But the judge also rejected two key provisions of the deal, potentially jeopardizing the agreement that the organization had been hoping to use as a springboard to emerge from bankruptcy later this year.

Following three days of testimony and arguments, Judge Laura Selber Silverstein granted the BSA’s request to enter into an agreement involving the national Boy Scouts organization, roughly 250 local Boy Scout councils, and attorneys representing some 70,000 men who say they were sexually abused as youngsters decades ago while engaged in Boy Scout-related activities. The agreement calls for the Boy Scouts and local councils to contribute $850 million into a fund for abuse claimants.

The agreement was opposed by insurers who issued policies to the Boy Scouts and local councils, attorneys representing thousands of other abuse victims, and various church denominations that have sponsored local Boy Scout troops.

It was not immediately clear how Thursday’s ruling will affect the future of the bankruptcy case, given that she rejected two significant provisions in the restructuring support agreement, or RSA.