Tort Claimants’ Committee for Boy Scouts of America Bankruptcy Rejects Modified Fifth Amended Plan of Reorganization
FOR IMMEDIATE RELEASE
Los Angeles, CA – September 30, 2021 – Today, the Official Tort Claimants’ Committee (TCC) announced that it continues to oppose the proposed Modified Fifth Amended Plan of Reorganization (“Plan”) proposed by the Boy Scouts of America (BSA) for a variety of reasons, and opposes the proposed settlements in the proposed plan with The Hartford Insurance Company, the Church of Jesus Christ of Latter-day Saints, and Boy Scouts local councils on the basis that the amounts are far too low. In its filed opposing papers, the TCC states that “the Plan [would] enable[] the Boy Scouts, Local Councils, and Chartered Organizations to make a clean get-away from their legacy of broken lives in exchange for a contribution of a relatively small amount of cash [and] illiquid assets.” The TCC maintains that the proposed settlements will lead to recoveries for survivors that are unconscionably low. The TCC filed with the Bankruptcy Court a letter from the TCC to survivors that will be included in the voting materials urging survivors to vote “NO” on the plan and explaining the bases for their recommendation.
John Humphrey, Chairman of the TCC, stated that “The Plan’s supporters, including the self-described Coalition of Abused Scouts for Justice (a group controlled by a few plaintiff attorneys), advertise a topline settlement number in the BSA’s plan that seems large (approximately $1.8 billion) but they ignore the fact that the settlements will only compensate survivors on average less than $21,000 per survivor.” Mr. Humphrey went on to say that “This much ballyhooed settlement represents a fraction of what the settling parties should and can pay to the tens of thousands of survivors based on the Boy Scouts’, local councils’, and The Hartford’s financial exposure and available assets.” Mr. Humphrey affirmed that “As Chairman of the TCC, I cannot in good conscience support a plan that leaves survivors woefully undercompensated.”
The TCC calls attention to at least three major flaws contained in the Plan.
First, the Plan includes settlements that the TCC believes will pay survivors less than ten cents on the dollar. The BSA’s representation that survivors could receive as much as 100% of the value of their claims is based on a very narrow view of which abuse claims are valid, estimating the total value of the abuse claims to be between $2.4 and $7 billion. In comparison, the future claims representative, a fiduciary appointed by the Bankruptcy Court, believes that the abuse claims should be valued at approximately $25 billion, more than TEN TIMES the BSA’s low-end estimate.
Second, chartered organizations are not paying for the broad releases of sexual-abuse claims. The $250 million settlement by the Church of Jesus Christ of Latter-day Saints benefits only those survivors with claims against the church. None of the settlement money goes to any other survivor, setting one subgroup of survivors against all other survivors. Yet, the BSA and the Coalition of Abuse Scouts for Justice (the “Coalition”) misleadingly include that $250 million settlement figure in their announcements of global settlements.
Third, the plan includes a $787 million settlement with The Hartford Insurance Company. Despite the large topline number, the average payment to a survivor is less than $9,600. BSA and local councils paid substantial sums to the insurance carriers in annual premiums for decades to cover the sexual-abuse claims. The TCC takes issue with the free ride given to The Hartford by having it pay for only a small fraction of the coverage it is contractually obligated to provide.
“With the approval of the disclosure statement, survivors themselves finally will have their voice heard by voting on the Plan,” added Doug Kennedy, Vice Chairman of the TCC. “The Tort Claimants' Committee will continue to give survivors the real facts about the Plan and the settlements. These real facts will show that the BSA and the Coalition are not advancing the interests of survivors because they are unwilling to do the work necessary to reach a resolution that is fair to survivors.”
“Survivors should not be fooled that they are going to receive fair compensation under the BSA’s sixth belated attempt to avoid responsibility for the abuse of tens of thousands of children,” said James Stang of Pachulski Stang Ziehl & Jones. “The Tort Claimants’ Committee will oppose the Boy Scouts’ Plan and fight for survivors.”
More information on the restructuring can be found at https://www.pszjlaw.com/bsa.html.
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