BSA Files for Bankruptcy Following Sex Abuse Scandal
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BSA Files for Bankruptcy Following Sex Abuse Scandal

by | Jun 16, 2020 | Bankruptcy

Since its inception in 1910, the Boy Scouts of America has become synonymous with American boyhood. In recent years, however, this storied organization has come under fire for its part in the sexual abuse of thousands of scouts. In light of hundreds of lawsuits filed in state and federal courts, the BSA chose to combat piecemeal litigation by filing for Chapter 11 bankruptcy on February 18, 2020.

Lawsuits Trigger Unusual Chapter 11 Filing

The BSA Chapter 11 filing is not a typical bankruptcy proceeding, in that the organization is not struggling to remain viable following a recession, bad business decisions, or mounting debt. On the contrary, BSA is known to control physical and liquid assets valued over $1 billion.

Boy Scouts of America filed for Chapter 11:

  • to timely and equitably compensate victims of abuse
  • to ensure BSA emerges from bankruptcy able to continue its charitable mission
  • to reduce mounting costs stemming from years of sex abuse lawsuits

In this instance, Chapter 11 bankruptcy allows sex abuse victims to receive equitable settlement distributions while allowing BSA to minimize costs associated with case-by-case litigation. The onus, however, falls on victims to submit their claims in order to take part in the distribution of settlement funds.

Abuse Victims Must Submit Claims Before Deadline

Once a bankruptcy petition is filed, any creditor seeking to make a claim against the assets of a debtor must file a proof of claim. This document acknowledges the right of a creditor to receive monetary distributions and supplies information about amounts owed. The proof-of-claim deadline for the BSA Chapter 11 bankruptcy case is currently set for November 16, 2020.

This deadline requires abuse victims to submit written claims in order to receive compensation from the settlement trust established to compensate victims. While the settlement trust prevents abuse victims from litigating their cases individually, it may provide swifter resolutions for those who would have otherwise filed alone. Unfortunately, those who miss the proof-of-claim deadline may never have the opportunity to file a lawsuit against BSA for the abuse they received.

How Creditors’ Committees Work for Abuse Victims

Another noteworthy feature of Chapter 11 bankruptcy is the appointment of creditors’ committees. These committees are selected by court-appointed trustees and serve to represent the collective interests of all creditors—in this case, BSA sex abuse survivors. The members of the committee act as fiduciaries who take part in the formulation of a reorganization plan and ensure the victims’ interests are appropriately represented in the creation of the settlement trust.

In short, a creditors’ committee is a group of independent, court-appointed representatives who are tasked with fairly compensating large numbers of victims for their injuries. This feature is especially beneficial for claimants who are owed relatively small sums but still wish to seek financial restitution for the abuse they endured.

In order to guarantee fair treatment for all creditors, these committees may also enlist the help of professional experts to determine how best to compensate victims. They may, for example, choose to bring on accountants, auditors, or appraisers to assist with the formulation of reorganization and distribution plans. These experts will likewise be paid by the debtor, not by victims or their representatives.

What BSA Abuse Victims Should Do Now

Current or former Boy Scouts who suffered sexual abuse at the hands of troop leaders, scout masters, or other BSA representatives should submit their proofs of claim as soon as possible to make sure their eligibility is confirmed before the slated deadline of November 16, 2020.

While the proof-of-claim form is a relatively simple, three-part document, victims would be wise to first consult with an attorney before filing their paperwork. An experienced abuse attorney can catch common filing errors that might otherwise preclude claimants from taking part in settlement distributions.

Many reputable law firms offer prospective clients free case reviews or initial consultations, giving victims a risk-free opportunity to explore their legal options. What’s more, it is common in cases such as these for a creditor’s attorney to be paid directly from settlement funds, allowing clients to leave their checkbooks at home and focus on the process of pursuing justice and gaining closure.

If you suffered sexual abuse by a current or former BSA employee, consider consulting with a trusted, local attorney with a history of successfully litigating sexual abuse cases. For tips on finding the right attorney for your unique legal situation, visit our dedicated webpage on the subject.

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