Boy Scouts set to exit bankruptcy after $2.46 billion U.S. sex abuse settlement approved

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FILE PHOTO: Scout statue at the Boy Scouts of America headquarters in Irving

By Dietrich Knauth

(Reuters) - The Boy Scouts of America secured approval of a $2.46 billion reorganization plan from a bankruptcy judge on Thursday that will allow the youth organization to exit Chapter 11 and settle decades of claims by more than 80,000 men who say they were abused as children by troop leaders.

U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware signed off on the restructuring plan after the Boy Scouts made changes to address portions of a previous settlement proposal she had rejected.

The biggest change in the amended plan was the removal of a $250 million settlement payment from the Church of Jesus Christ of Latter-day Saints, which Silverstein refused to approve.

Silverstein said that part of that settlement proposal went too far in attempting to protect the Mormon church from abuse claims that were only loosely connected to scouting activities.

The Irving, Texas-based organization, has said the reorganization will allow it to continue its scouting mission free from the threat of costly litigation.

"Today's order means abuse survivors will get the compensation they deserve and millions of youth will benefit from scouting for years to come," said Richard Mason, an attorney representing local Boy Scouts councils that contributed to the settlement.

The Coalition of Abused Scouts for Justice, which represents the majority of abuse claimants in the case, said the bankruptcy ruling would set up the largest sexual abuse settlement fund in history.

Coalition attorney Anne Andrews said she was "overjoyed for survivors.... They wanted Boy Scouts to survive, and they wanted to ensure this never happened to another child."

The Boy Scouts said it was "enormously grateful" to abuse survivors who helped craft the settlement.

The Boy Scouts filed for bankruptcy in February 2020 after being hit by a flood of sexual abuse lawsuits as several U.S. states passed laws allowing accusers to sue over allegations dating back decades.

Those claimants became creditors of the organization, who had to sign off on any plans to restructure and exit bankruptcy.

The Boy Scouts lined up support for the settlement plan from 86% of claimants who voted on it and from its two largest insurers.

Some abuse victims and insurers continued to oppose the settlement, and a group of insurers has said they are likely to appeal. The appeals must be addressed in order for the Scouts to emerge from bankruptcy.

The Boy Scouts organization said it will work to resolve the appeals in federal district court to complete the settlement.

The amount of money individual abuse survivors stand to gain from the bankruptcy plan ranges from $3,500 to $2.7 million, depending on the severity of the alleged abuse, where and when it occurred, and other factors.

The money for the settlement comes from the Boy Scouts, local councils, insurers and organizations that have chartered Scouting units and activities, including churches.

Lawyers had warned the 112-year-old organization might not survive without a wide-ranging settlement of abuse litigation. Silverstein voiced concern earlier in the bankruptcy that the litigation had "the potential to end the Boy Scouts as it currently exists."

The organization has apologized and said the organization is committed to fulfilling their "social and moral responsibility to equitably compensate survivors."

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Bill Berkrot)