Bankruptcy deal reached with attorneys for sex-abuse survivors

Negotiators for the Boy Scouts of America and lawyers for thousands of sexual-abuse survivors have struck an eleventh-hour deal to allow the youth group’s reorganization plan to move forward in bankruptcy court.

The new plan does not immediately add money to a trust fund to be shared by about 82,000 former Scouts who have filed claims. But it includes improvements to the claims process and enhancements to the organization’s child-protection policies, according to terms of the agreement.

The agreement removes major obstacles to the Scouts’ reorganization plan, but does not guarantee its success. The plan must be confirmed by a federal judge and still faces opposition from some plaintiffs’ attorneys and the U.S. trustee, the bankruptcy system’s watchdog, which has objected to several of its provisions.

The Scouts’ previous offer of a $2.7 billion settlement, touted as the largest of its kind in U.S. history, hit a major snag last month when it failed to garner “overwhelming support” from the nearly 54,000 abuse survivors who voted on it.

The plan needed a “yes” vote of about 75% to be confirmed by U.S. Bankruptcy Judge Laurie Selber Silverstein, who has scheduled a Feb. 22 hearing in Delaware. It wound up just shy of that, with about 73% approving.

The initial results capped a contentious voting period in which plaintiffs’ lawyers squared off against each other, with some hailing the settlement offer as the best deal possible and others denouncing it as woefully lacking.

The official tort claimants committee, appointed by the bankruptcy trustee to represent the interests of all victims in the proceedings, had been among the staunchest opponents.

But late Wednesday, mediator in the case announced in a court filing that various sides had agreed in principle on a new deal.

“As a result, the TCC succeeded in reaching its goals of meaningful child protection, independent governance of the Settlement Trust and an enhanced compensation structure for survivors,” said John Humphrey, the committee cochair.

“With these accomplishments in hand, the TCC recommends that all survivors vote to accept the new and improved plan,” he said.

In a statement Thursday, the Boy Scouts of America said that, with the agreement, “all significant survivor constituencies now support the BSA’s plan.”