Sex-Abuse Claims Force Boy Scouts to File for Bankruptcy

A statue stands outside the Boys Scouts of America headquarters in Irving, Texas. (AP Photo/LM Otero)

DALLAS (CN) – The Boy Scouts of America filed for bankruptcy protection Tuesday, seeking to shield its local councils from hundreds of sex-abuse lawsuits while establishing a victims’ compensation trust to pay settlements.

Based in Irving, Texas, the 110-year-old youth organization filed for Chapter 11 protection in federal bankruptcy court in Wilmington, Delaware, at midnight.

Boy Scouts said scouting programs including service projects, scouting adventures, unit meetings and council events will continue through bankruptcy and into the future. It said its local councils have not filed for bankruptcy and are “legally separate, distinct and financially independent” entities that provide support for local scout units.

Roger Mosby, Boy Scouts’ president and chief executive officer, expressed outrage at adults taking “advantage of our programs” to hurt children.

Norman Rockwell’s idyllic painting of a Boy Scout at the Church History Museum in Salt Lake City, Utah. (AP file photo)

“The BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in scouting,” Mosby said in a written statement. “While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process – with the proposed trust structure – will provide equitable compensation to all victims while maintaining the BSA’s important mission.”

The Boy Scouts’ bankruptcy is expected to be more complex than the Catholic Church’s handling of its sex-abuse lawsuits due to the national organization’s 50-state presence. The church’s bankruptcies have taken place on the local diocese level.

The bankruptcy comes one month after California law AB 218 took effect, which allows sex-abuse victims to sue on claims previously barred by the statute of limitations through a three-year “lookback window.” The law allows victims to sue until they are 40 years old or five years after they first learn of injuries caused by the abuse.

One lawsuit filed under the law last month in Orange County claims Boy Scouts hid over 1,123 “perversion files” from scouts and the public between 1965 and 1985, averaging one new file being added every week. The lawsuit alleges the files hid the names of 7,819 scout leaders and volunteers accused of abuse and that there may be as many as 40,000 victims. Similar laws have been passed in New York, Arizona and New Jersey.

Boy Scouts says it is encouraging victims to come forward and file a claim in bankruptcy court and that it will provide “clear and comprehensive notices” on how to do so.

In response to the mounting lawsuits, Boy Scouts has mortgaged several of its properties owned by the national organization in order to secure lines of credit, including the 140,000-acre Philmont Ranch in New Mexico and its national headquarters in the suburbs of Dallas. The national organization has needed the financing as several of its insurers have refused to defend or indemnify Boy Scouts against the sex-abuse claims.

Victims’ attorney Paul Mones said his clients “want no stone unturned” during the bankruptcy process.

“There are a lot of very angry, resentful men out there who will not allow the Boy Scouts to get away without saying what all their assets are,” Mones told the Associated Press.

The bankruptcy comes one month after the Church of Jesus Christ Latter-day Saints dealt a devastating blow to Boy Scouts when it pulled over 400,000 scouts out of the program, causing an 18% drop in overall youth membership. Boy Scouts membership has now dipped below 2 million, down from over 4 million during the 1970s.

Boy Scouts has between $1 billion and $10 billion in assets and between $500 million and $1 billion in liabilities, according to the bankruptcy petition.

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