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Boy Scouts Reach $850 Million Settlement With Sexual Abuse Victims

Several victims' attorneys blasted the proposed payout as inadequate and demanded more transparency from local councils as to what assets they hold.

DALLAS (CN) --- The Boy Scouts of America reached a landmark $850 million settlement in bankruptcy court Thursday night with over 84,000 former scouts who say they were sexually abused as far back as the 1960s.

The settlement is one of the largest in the history of sexual abuse cases in the United States. The 111-year-old Boy Scouts filed for Chapter 11 protection last February as it faced an avalanche of lawsuits claiming abuse by adult scout leaders and volunteers.

The Boy Scouts says the settlement resulted from months of mediation assisted by the federal bankruptcy court in Delaware and meets the dual objectives of compensating the victims while emerging from bankruptcy.

“Importantly, the amended plan under the [settlement] now has the significant plaintiff support of representatives for approximately 60,000 abuse survivors, and provides a framework for the global resolution of abuse claims, including third-party releases for the local councils and others that are essential to the debtors’ ability to continue to carry out the scouting mission,” a 30-page motion for a restructured support agreement states.

It continues, “In addition, the amended plan proposed under the RSA will maximize the value of the debtors’ estates for all creditors, permit the debtors to avoid costly litigation with the plaintiff representatives, and preserve the charitable mission of the BSA.”

The organization has also agreed to hand over insurance rights to a victim’s trust that will handle claims and distribute payments, resulting in a possible total payout of over $1 billion.

Over 88,000 sexual abuse claims were filed before the court-imposed application deadline passed last November, far exceeding expectations.

Critics claimed the Boy Scouts' bankruptcy filing was an attempt at shielding local councils from liability, with the national organization mortgaging several of its properties to raise money for the lawsuits. The affected properties include the 140,000-acre Philmont Ranch in New Mexico and the Boy Scouts’ national headquarters in Irving, Texas.

Attorney Ken Rothweiler, with Eisenberg Rothweiler in Philadelphia, represents over 16,000 former scouts who are mostly over 60 years of age. He commended the BSA and its local councils as having “stepped up to be the first” to pay sexual abuse survivors under the settlement.

“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,” Rothweiler said in a statement.

The Boy Scouts said the settlement allows local councils to both contribute to the victims’ trust “without additional drain on their assets” while helping the national organization emerge from bankruptcy.

“There is still much to be done to obtain approval from the court to solicit survivors to vote for the BSA’s amended plan of reorganization,” the Boy Scouts said in a statement. “However, with this encouraging and significant step forward, the BSA is wholeheartedly committed to working toward a global resolution. Our intention is to seek confirmation of the Plan this summer and emerge from bankruptcy late this year.”

But attorney Tim Kosnoff in Houston blasted the settlement as a “rotten, chump deal” for his clients.

"You're talking about clients who, in some cases, were anally raped for years that are now supposed to get payouts of $3,500 ... maybe $5,000," Kosnoff told NPR. "That is an insult to all of the men who found the courage to file claims and participated in this process."

Attorney Michael Pfau, with Pfau Cochran in Seattle, questioned whether the settlement is adequate given the billions of dollars of additional assets the local councils have. Several victims’ attorneys have criticized a lack of transparency in what assets the local councils have.

"The Boy Scouts have disclosed that their local councils have over $1.8 billion in unrestricted net assets, but their latest plan and disclosure statement fail to disclose how much each council is contributing to this bankruptcy," Pfau said. "Our clients are already calling us and asking why this new proposal is acceptable when it appears the local councils have so much more to contribute."

The bankruptcy court has scheduled a hearing on the proposed settlement for July 20.

The Boy Scouts have grappled with dueling existential crises in recent years, as it has dealt with rapidly falling membership numbers along with the thousands of sex abuse claims. It has a current membership of 2 million, down from over 4 million in the 1970s. The bankruptcy filing came weeks after the Church of Jesus Christ of Latter-day Saints pulled over 400,000 members, causing an 18% drop in overall youth membership.

The organization is accused in one case of hiding over 1,123 “perversion files” from members and the public between 1965 and 1985, averaging one new file being added every week. Filed in California state court last year, one lawsuit alleges the files hid the names of 7,819 scout leaders and volunteers accused of abuse.

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