The Boys Scouts of America has reached a $850billion settlement with more than 60,000 men whose claims of child sex abuse by volunteers and troop leaders span six decades.
The settlement was disclosed in a Thursday filing with the US Bankruptcy Court in Delaware - more than a year after the 110-year-old non-profit valued at over $1billion filed for Chapter 11 protection from creditors in the face of more than 275 abuse lawsuits and 1,400 potential claims.
More than 84,000 men joined the largest lawsuit before a November 2020 deadline for victims to come forward.
In Thursday's filing, BSA said its proposal has support from representatives for about 60,000 abuse survivors and provides a framework for a global resolution of abuse claims.
Groups representing abuse victims said in a joint statement that the accord, which requires court approval, 'achieves consensus' among large numbers of claimants, as well as the Boy Scouts and more than 250 local councils.
The filing came after several US states, including New York, removed legal hurdles that had barred people from suing over sex abuses they claimed had occurred decades earlier.
Ken Rothweiler, an attorney at Eisenberg Rothweiler in Philadelphia who represents the largest group of claimants with more than 16,800 people called the settlement a step toward justice.
He said the majority of his clients were abused as teenagers and are now in their 60s and 70s.
'I am pleased that both the BSA and their local councils have stepped up to be the first to compensate the survivors,' Rothweiler said in a statement obtained by NBC News on Thursday.
'We will now negotiate with the insurers and sponsoring and chartering organizations who have billions of dollars in legal exposure, of which a substantial portion is necessary to fairly compensate the survivors.
The Boys Scouts of America has reached a $850billion settlement with 60,000 men who brought child sex abuse claims against the organization, in what could prove to be a pivotal moment in its bankruptcy case (file photo)
A 65-year-old claimant who lives in the New York area said: 'As a former Boy Scout who is a sexual abuse survivor, I am gratified that the Boy Scouts are taking responsibility for the sexual abuse that occurred to me and others that we have had to live with for decades.
'This acknowledgment by the Boy Scouts will start the process of healing for many of us who have suffered.'
Attorneys for the BSA filed court papers late Thursday outlining a restructuring support agreement, or RSA, with attorneys representing abuse victims.
The agreement includes both the official tort claimants committee, which is charged with acting as a fiduciary in the bankruptcy case for all abuse victims, as well as a separate plaintiffs group called the Coalition of Abused Scouts for Justice.
It also includes attorneys representing local Boy Scouts councils and lawyers appointed to represent victims who might file future claims.
'After months of intensive negotiations, the debtors have reached resolution with every single official and major creditor constituency in these Chapter 11 cases,' BSA attorneys wrote.
The agreement signals the BSA's acknowledgment that the gulf between attorneys representing abuse victims and those representing the BSA's insurers is currently too broad to be resolved. They may very well be left to resolve their differences in future court battles, a prospect that the BSA had sought to avoid.
In an earlier court filing Thursday, attorneys for certain insurance companies accused the BSA of allowing attorneys for abuse victims to rewrite the BSA's restructuring plan to include terms favorable to their clients.
'With only the fox guarding the henhouse, the outcome is utterly at odds with what BSA itself asserted was necessary for a confirmable plan and is permissible under the bankruptcy code,' the insurers wrote.
Attorneys for insurers appear to be particularly concerned that the BSA's liability for abuse claims would be adjudicated under proposed trust distribution procedures in an effort decide insurance coverage issues.
Meanwhile, in connection with the restructuring support agreement, attorneys for the Boy Scouts are asking for US Bankruptcy Judge Laurie Selber Silverstein to declare that they have no obligation to seek court approval of a previously announced settlement with The Hartford, one of the BSA's insurers.
The Hartford agreed to pay $650million into the victims' trust in exchange for being released from any further obligations under policies dating to 1971. The agreement allowed The Hartford to pay a lesser amount if the BSA or the settlement trust reaches an agreement with another major BSA insurer, Century Insurance Group, and Century's settlement amount is less than two times The Hartford's, or $1.3billion.
The Hartford settlement was roundly criticized by attorneys for abuse victims, who estimate the insurer's liability exposure at several billion dollars. They made it clear that victims would not support any plan that includes the Hartford settlement.
BSA - a 110-year-old non-profit valued at over $1billion - filed for Chapter 11 protection from creditors in the face of more than 275 abuse lawsuits and 1,400 potential claims
Allegations against former Florida troop leader and teacher Gary Stroup (left) and former troop leader Carmine Charles Robert Falco (right) were brought to light in a 2019 lawsuit
The Boy Scouts have said that between $2.4billion and $7.1billion, including insurance rights, might be available for abuse victims. Attorneys for the tort claimants committee, or TCC, have estimated the value of some 82,500 sexual abuse claims at about $103billion.
'All plaintiff representatives, who represent the vast majority of the holders of direct abuse claims, have indicated that any plan containing the Hartford Settlement would be categorically rejected,' BSA attorneys wrote in Thursday´s court filing. 'Without their support, to be forced to pursue a plan that incorporates the Hartford settlement appears futile.'
In a joint statement, the Coalition, the TCC, and the future claimants representative said the restructuring support agreement will allow the Boy Scouts to emerge from bankruptcy 'while providing meaningful compensation to the victims, and holding the Boy Scouts' insurers to the terms of the insurance policies purchased by the Boy Scouts and their affiliates over many decades.'
In a revised plan submitted barely two weeks ago, the BSA offered to issue an $80million unsecured promissory note to a trust fund for abuse victims. It also proposed using restricted assets to help cover post-bankruptcy operational expenses, which would make up to $50million in unrestricted cash available for abuse survivors. With the changes, the BSA's proposed contribution to the trust fund would increase from about $120million under a previous plan to as much as roughly $250million.
Under a new plan expected to be filed Friday, the BSA's 250-odd local councils would contribute $600million into the fund for abuse victims, double an offer of $300million from earlier this year. At least half of the councils' contribution would be in cash.
In return for their contributions to the trust fund and the transfer of insurance rights, the BSA and local councils would be released from liability. Sponsoring organizations such as churches and civic groups also could be released from further liability in exchange for contributing to the fund and transferring insurance rights.
A hearing in the case is schedule for July 20.
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