Frequently Asked Questions
The Boy Scouts Proposed PlanBenefits To Survivors
Below are some frequently asked questions in regards to the proposed settlement plan, and why the Coalition supports the reorganization plan.
The Plan Supported by the Coalition of Abused Scouts for Justice (the “Coalition”): The Plan presently provides the Settlement Trust with over $1.8 billion of value for distribution to survivors. This sum now constitutes the largest sexual abuse settlement fund in the history of the United States. It is comprised of the $787 million Hartford settlement, the $250 million Church of Jesus Christ of Latter-day Saints settlement, $600 million from Boy Scouts Local Councils (the “Local Councils”), and up to $220 million from the Boy Scouts of America (“Boy Scouts”). Significantly, this amount may increase as additional settlements with the various remaining non-settling insurers and chartered/sponsoring organizations (the “Chartered Organizations”) may be reached. The Coalition believes that significant additional contributions to the Plan should be made by dozens of insurance companies, including AIG and Century, and numerous Chartered Organizations that include churches and social organizations across the country. Any additional settlements reached will be promptly disclosed to the Bankruptcy Court and to survivors.
The Tort Claimants Committee (the “TCC”) and a number of law firms do not currently support the $787 million Hartford settlement and the $250 million Church of Jesus Christ of Latter-day Saints settlement, and the TCC now may no longer support the $600 million Local Councils settlement that it had previously supported alongside the Coalition. Boy Scouts, however, does not support a Plan where there are no settlements, which would leave the uncertainty of years of litigation against non-settling parties. If the Plan is not approved, the amount that Boy Scouts will then have to fund any trust will be well below the approximately $220 million that is presently forecasted, and the Local Councils have stated that they will not contribute money to a Trust unless they and certain Chartered Organizations get releases under the Plan.
Financial advisors to the Coalition, Boy Scouts and others agree that the assets on hand for the Boy Scouts are severely limited and decreasing as this bankruptcy drags on. Boy Scouts is paying its professionals approximately $4 million per month, and the TCC’s fees for its lawyers and other advisors alone total approximately $1 million or more per month. This drain on Boy Scouts’ estate reduces the amount of money that Boy Scouts will deliver to the Settlement Trust. Moreover, if the Boy Scouts do not emerge from bankruptcy in the coming months, they will not be able to function as a going concern. The Boy Scouts believe they will not be able to survive if they do not emerge by February 2022; there are other good faith estimates that predict late Spring 2022 as a time barrier. What this means is that if this Plan is not approved, there are no good options. The likely result would be (i) either a stand-alone Boys Scouts plan or a Boy Scouts liquidation, both of which would offer negligible distributions to survivors, (ii) years of litigation (in lieu of the settlements which would be unwound and disappear upon Plan disapproval) against Local Councils, insurers and Chartered Organizations and (iii) likely in seriatim, separate Local Council and Chartered Organization bankruptcies around the country that would further confound and delay compensation to survivors.
Under the Plan and the settlements to date, almost $1 billion value will be transferred to the settlement trust and available for distribution to survivors upon Boy Scouts emerging from bankruptcy, which may occur in the first quarter of 2022. The remaining monies due under the Plan (over $2.6 billion committed to date, with more anticipated) will be delivered to the Settlement Trust no later than after any appeals run their course and Plan approval remains intact. If the Plan is not approved, as set forth above, survivors face the prospect of years of delay and individual survivor litigations and possible, multiple other bankruptcies before survivors may receive any meaningful compensation. Many survivors, who were abused decades ago and are now in their 60s, 70s, 80s or even older, do not want to or cannot wait so long.
The Plan fairly and equitably treats the claims of ALL survivors, whether or not they (i) reside in states with open statute of limitations windows or states with more problematic or closed statute of limitations regimes, and/or (ii) can assert claims against the wealthier Local Councils or Chartered Organizations.
There are approximately 82,500 survivors with claims. The “No Plan” scenario as described above leaves the prospect of these survivors receiving negligible distributions from a stand-alone Boy Scouts plan or liquidation and then facing years of litigation in the tort system for further recoveries. Even if only a portion of these claims are actually litigated, that could mean tens of thousands of cases against multitudes of defendants, including approximately 250 Local Councils and an untold number of Chartered Organizations across all 50 states. The prosecution of these cases in the tort system then may result, as noted above, in new Local Council and Chartered Organization bankruptcies, further confounding and delaying the delivery of compensation to survivors. In this scenario the Local Councils, Chartered Organizations and their insurers will, of course, put on their best defense cases, including asserting statute of limitation defenses against survivors in non-open states, and there will the usual insurance related complicating issues such as coverage defenses, deductibles, policy limits and settled policies.
Further, there are many reasons why survivors may prefer a bankruptcy resolution rather than the tort system as a means to obtaining meaningful compensation: the age of survivor, the time it takes to take a case through tort system, the survivor’s desire for privacy and discretion, whether the survivor is in a state where claims have serious or severe statute of limitations challenges, and the survivor’s ability to undertake the financial, physical, and emotional strain of a trial process. The Plan, which fairly and equitably treats all survivors, addresses these obstacles.
Under the Plan, the Local Councils will contribute $600 million in the aggregate to the Settlement Trust, which will be available for distribution to survivors shortly after the Plan becomes effective.
The “No Plan” scenario described above would leave survivors to litigate in the tort system for any and all recoveries against Local Councils. As noted above, many survivors may have challenges as to their prospects for recovery due to statute of limitations defenses in non-open states, insurance-related complicating issues, and the financial limitations of some Local Councils. Regardless, under this scenario it is highly likely that the volume of lawsuits against Local Councils would force some into bankruptcy, triggering over a billion dollars in pension liability across all of the Local Councils and Boy Scouts (i.e., over $1 billion in pension liability could be asserted against each Local Council and Boy Scouts). This would lead to even more bankruptcy filings in which survivors could receive nothing, due to the magnitude of the pension liability.
Under the Plan, Hartford will contribute $787 million to the Settlement Trust, which amount cannot be reduced. Of that, $137 million will be contributed on or soon after the Plan effective date and can be distributed to survivors shortly thereafter.
The “No Plan” scenario would allow Hartford and Boy Scouts to return to the agreement they made prior to the negotiation of the Plan (the “First Hartford Deal”). Under the First Hartford Deal, Hartford would contribute a maximum of $650 million to the Settlement Trust, which amount would decrease under a clause in the First Hartford Deal that reduces the contribution in proportion to amounts received from another insurer, Century. The Coalition estimates that due to that clause, Hartford’s contribution may ultimately be not more than $400 million. Moreover, the First Hartford Deal contains additional provisions providing Hartford extensive influence over any Boy Scouts reorganization plan, including provisions that would make it difficult for survivors to recover from (i) the Trust itself, (ii) Boy Scouts’ insurers, and/or (iii) Chartered Organizations.
The “No Plan” scenario could also result in the unwinding of any deal with Hartford and reversion to the individual survivor litigation scenario in which each individual survivor would have to sue in the tort system to access the Hartford insurance, facing risks and hardships as described above.
Under the Plan, the Church of Jesus Christ of Latter-Day Saints (“LDS” or “TCJC”), a significant Chartered Organization, will contribute $250 million to the Settlement Trust, which amount cannot be reduced. This LDS settlement is reserved for those survivors that have a claim against LDS. The remainder of the $1.8 billion of proposed settlement funds are not so earmarked.
The “No Plan” scenario would unwind the agreement with LDS. Survivors would be required to individually sue LDS for recoveries. Because Utah, where many claims against LDS may be brought, is a non-open state, among other reasons set forth above, it may be difficult for many survivors to succeed in litigation against LDS in the “No Plan” scenario.
Some lawyers believe that Boy Scouts, the Local Councils, Hartford, and/or LDS can contribute more money to the Plan. Some lawyers additionally believe the Plan contains provisions (mostly insurance- related) that the Court will not approve. Some lawyers believe that particular clients might obtain a greater financial benefit under alternatives to the Plan, regardless of the effect on the survivor community in general.
The Coalition respectfully disagrees.
Why do we disagree?
We have attended dozens of mediation sessions with insurers and Chartered Organizations and have hired some of the best experts in the country in appraisal, financial analyses and statistical insurance modeling. The attorneys that built this Plan, with the largest sexual abuse compensation fund in the history of the United States (with additional contributions anticipated), have worked on some of the largest bankruptcy cases in the history of America: Purdue Pharma and PG&E to name a couple. The Plan’s objective is to fairly and equitably treat ALL survivors, not just a few.