IS THE BANKRUPTCY PLAN OF THE BOY SCOUTS OF AMERICA ABOUT TO COLLAPSE?

Most people don’t know that the Boy Scouts of America organization has declared a Chapter 11 reorganization bankruptcy to get out from under the weight of about 80,000 damages claims, made by men who say various troop leaders sexually abused them when they were kids. Well, in September, the Bankruptcy Judge approved a $2.46 billion dollar workout plan that, supposedly, will allow the Boy Scouts to continue operating, while compensating the men who were abused as children.

Well, a few days ago, a group of insurers argued at a hearing, in seeking to have the order reversed, that they will be on the hook for paying additional funds to the abused men, if their claims are accepted under the plan. They argue that the procedures for distributing funds from the proposed compensation trust violates their contractual rights to contest claims under the insurance policies, sets a dangerous precedent for mass tort litigation, and will result in grossly inflated payments to many men who would never, otherwise, he able to prove their claims.

The bulk of the compensation fund would come from the Boy Scout’s two largest insurers, Century Indemnity and The Hartford, which reached settlements calling for them to contribute $800 million and $787 million, respectively. Other insurers agreed to contribute about $69 million. The non-settling insurers, however, contend that language creates too much uncertainty regarding their rights and how much discretion is being given to the retired bankruptcy judge who would oversee the settlement trust.

Only time will tell whether the higher court will overturn the Bankruptcy Judge’s decision.