Boy Scouts File for Bankruptcy

The venerable youth organization has fallen on hard times.

Boy Scouts of America filed for bankruptcy protection early today amid declining membership and a drumbeat of child sexual abuse allegations that have illuminated the depth of the problem within the organization and Scouts’ failure to get a handle on it
After months of speculation and mounting civil litigation, the Chapter 11 filing by the scouting organization’s national body was unprecedented in both scope and complexity. It was filed in Delaware Bankruptcy Court overnight. 

The exact effects on Boy Scouts’ future operations are unknown, leading to speculation about the organization’s odds for survival, the impact on local troops and how bankruptcy could change the dynamic for abuse survivors who have yet to come forward. Some fear that at a minimum it will prevent survivors from naming their abuser in open court.

[…]

“The BSA intends to use the Chapter 11 process to create a Victims Compensation Trust that would provide equitable compensation to victims.

“Scouting programs will continue throughout this process and for many years to come. Local Councils are not filing for bankruptcy as they are legally separate and distinct organizations.”

It is exactly that distinction that victims’ attorneys say will be the core of the legal battle ahead over which assets Boy Scouts must use to pay legal settlements and which can be shielded. The primary focus, they say, will center on property owned by the 266 regional councils and local troops.

I don’t have much light to shine on the legalities here. I was in Cub Scouts and Webelos forty-plus years ago but lost interest because of frequent family moves and didn’t join a Boy Scout troop when we moved to Germany. My two daughters have been in Girl Scouts since kindergarten but that’s a completely separate organization and one structured completely differently.

Girl Scouts are extremely hierarchical and tend to be based around schools. Boy Scout troops are quasi-independent organizations that tend to be centered around churches. And the parallels with the Roman Catholic Church are striking:

The scouting organization has been deeply mired in civil litigation since a landmark case in 2010 that resulted in $19.9 million in damages, the largest ever for a single individual against the Boy Scouts. That case triggered the release of more than 20,000 confidential documents, which became known as the “perversion files.” 

Those records named more than 1,000 banned volunteers, revealing that the 100-year-old organization had long kept track of suspected and known abusers and failed to consistently report them to police or inform parents or the public of the extent of the problem. 

[…]

Boy Scouts currently faces hundreds, if not thousands, of abuse lawsuits. New allegations poured in as efforts to extend the civil statute of limitations for survivors of child sexual abuse have gained momentum in recent years. 

The wave of lawsuits is not only crippling BSA but straining its relations with churches.

[O] n Jan. 1, the Church of Jesus Christ of Latter-day Saints - which for 100 years was among Boy Scouts’ largest partners - followed through on its plan to pull hundreds of thousands of Mormon youth out of Scouts in favor of its own youth program. That withdrawal caused an 18% drop in membership overnight, to fewer than 2 million. 

But the nonprofit organization’s chief financial concern, according to victims’ attorneys and bankruptcy experts, is rising liability from abuse lawsuits. The suits have led to battles with insurance carriers, who refused to pay out claims saying the Scouts failed to take effective preventative measures to stop the abuse. In 2018, Boy Scouts sued six of its carriers.  

The effects of bankruptcy aren’t fully clear but victims’ groups are concerned.

By filing for bankruptcy, the Boy Scouts can consolidate all of the lawsuits against them and pursue a settlement - potentially far lower than settlements outside of bankruptcy.

But Pamela Foohey, associate professor at the Indiana University Maurer School of Law, said there are benefits for survivors who have filed suit recently and would otherwise have faced a long legal battle and dwindling resources left to pay out a claim.

“It stops everything and it puts it in one place for the Boy Scouts to have time to assess the breadth, the scope of the litigation, of the claims, and then deal with it collectively,” Foohey said.

Typically, abuse survivors will be represented on a required committee of unsecured creditors or on a separate committee established to represent their interests, she said. The committee will try to negotiate a settlement in which the nonprofit sets aside a pot of money to settle claims.  

To gain access to those funds, survivors will have to file a claim by a date set by the bankruptcy judge. Critics say that process can be stacked in favor of the organization by forcing victims who may not be ready to come forward to file their claims. 

“It’s a huge advantage for these entities, and it cuts survivors off at the knees,” said Tim Hale, a California attorney who has settled numerous cases against the Catholic Church. 

Additionally, filing through the bankruptcy claims process tends to be much more private, thus potentially leaving alleged perpetrators unnamed rather than on the public record as would happen in a normal lawsuit. Then again, the reverse effect would seem true as well: victims who might otherwise be reluctant to come forward because of the exposure might have that barrier removed.

FILED UNDER: Law and the Courts, Religion, Society
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. OzarkHillbilly says:

    Pride goeth before the fall.

    My old man followed my older brother into the Scouts. Got into the organization in a big way, really believed in it. I can’t imagine what he would’ve thought of all this and am very glad he didn’t live to see it,

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  2. mistermix says:

    That story about the Mormons is misleading. They began plans to leave the Scouts when the Scouts began admitting gay and transgendered youth. It’s pretty well documented, here’s an example:

    https://www.sltrib.com/religion/2019/11/15/lds-church-leader-we/

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  3. Scott says:

    My youngest son was involved in cub scouts and a couple of years of Boy Scouts. I helped out Cub Scout Treasurer and Webelos Den Leader. This was post 2013. All adults had extensive training on proper behavior, etc. The key was the two adult rule. No child is left alone with an adult. Period.

    Boy Scouts is declining for a number of reasons, primarily competition from other activities: sports, music, church groups, etc. There is an attraction for Scouts especially for certain kinds of kids. Mine was pulled away by school activities. Also, there was too much emphasis on merit badges. It felt a lot like homework.

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  4. Scott says:

    @mistermix: I would say that the Mormons were a separate but equal part of Scouts. Their troops were pretty exclusive and the Scoutmasters were chosen by the church. It was not hard for them to separate.

  5. Argon says:

    Funny… The national organization used to claim it was keeping atheists, agnostics and openly gay scouts out because of their unfit morality. Fortunately, many local councils and troops weren’t as wrong headed as the national office.

    Another fun fact: Eagle scout certificates currently bear Donald Trump’s signature.

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  6. Mister Bluster says:

    I started as a Cub Scout in the ’50s and advanced to a Boy Scout Troop. In the early ’60s I joined an Explorer Post against the advice of my Boy Scout troop Scoutmaster.
    “Those guys are trouble.”
    They were my friends in High School that I hung around with all the time.
    Our Explorer Post meetings were at the Elks Lodge (? don’t remember). When we arrived all the Elks were gone but they had left their half empty adult drinks on the tables that we finished off when our Post Leader wasn’t looking.
    Trouble.
    I don’t think any of us even knew what child sexual abuse was.
    This is sick.

    1
  7. SKI says:

    filing through the bankruptcy claims process tends to be much more private, thus potentially leaving alleged perpetrators unnamed rather than on the public record as would happen in a normal lawsuit

    Huh?!?!

    Its been more than 15 years since I left bankruptcy law for healthcare and compliance but I’m pretty sure Proof of Claim forms are public record items and reviewable in PACER.

    _____________________
    As for the underlying story, they are also in trouble because they alienated a large portion of the country by being homophobic and then alienated the others by starting to reverse that.

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  8. Bill says:

    Me nor any of my three brothers were ever Boy Scouts. Mom and Dad didn’t like the Scouts for some reason but I don’t recall it. Patty, my half-sister, I think was a girl scout but I am not totally sure. She was almost 7 years older than me.

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  9. Robert C says:

    I was a Cub and Boy Scout for 4-5 years in the 70s. I refused to let my son be part of the organization because of their anti atheist and anti gay stance, and I explained this thoroughly to my 10 year old son. Good riddance.

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  10. Jay L Gischer says:

    I was a Boy Scout. I did a lot in the program, up to when I went to college, but that was in the stone age. Just last summer, I went to the Eagle Court of Honor for a young man I know well. This is a sad moment for me. I enjoyed my time with the Scouts, and thought it worthwhile.

    Oddly enough, our troop wasn’t centered on a church. It was sponsored by the local Lions Club.

  11. OzarkHillbilly says:

    @Argon: My brother’s has Nixon’s signature. At least it’s not trump’s.

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  12. Fortunato says:

    I was in the Scouts in the late 60’s, early 70’s. Tiny, rural community in the midwest. It was a great experience and I think character building. Our troop wasn’t affiliated with the church in any way. In fact, I’ve never really associated Scouts with religion – I’m likely a bit ill-informed on that front. I would imagine the Scouting experience has a lot to do with the local leadership. Our Den Master (we had only 1) was an outdoorsman (even though crippled by polio as a youth), a gifted craftsman and a bit of an intellectual. I don’t think religion was his bag, which likely served us all well.
    Sad to see the devolution of the organization. I truly wish we still lived in a society where the best of what is the Scouts were available to all youths.
    But as noted previously, when Eagle Scout certificates now bear the signature of Donald Trump (which many in the BSA hierarchy no doubt celebrate), you know you’re likely past the point of no return.

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  13. Fortunato says:

    @OzarkHillbilly:
    Of course Nixon was instrumental in the creation of the EPA.
    He also signed into law the Marine Mammal Protection Act, the Endangered Species Act, the Safe Drinking Water Act and others. Nixon rode the crest of the environmental movement and – unlike the wholly intransigent, special-interest owned Republican party of today – acted commendably.
    That’s a solid Eagle Scout certificate (and what a great piece of history!)

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  14. Michael Reynolds says:

    I was a Boy Scout for about a week. My father had been an advisor to Explorer Scouts – part of looking like a good Army officer. So I joined up with Boy Scouts to bond. To be normal. A few day in there was a big campout. You were supposed to bring a knife and I didn’t have one, so my dad supplied me with a Marine bayonet he happened to own. Not exactly a pocket knife. I could have shaved with it if I’d had anything to shave.

    First night in the camp (my dad was not there) I hear that all the new kids are hazed, stripped naked (gosh, what a surprise) and forced to run through the woods. So I let it be known that anyone who disturbed my sleep would get several inches of steel. I slept fine. Quit the next day. For many years that story painted me as some kind of head case*. Now it just looks like I was prescient.

    *In fairness, that was not the only evidence.

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  15. CSK says:

    I was a Scout for a short while. I quit because it was possibly the most boring enterprise in which I had ever engaged. Once the troop leader, a hopeless ditz and, I realize now, an equally hopeless lush, took us fishing and forgot to bring the poles. Otherwise we sat around and did absolutely nothing, as I recall.

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  16. Gustopher says:

    When they were excluding gay scoutmasters with the rationale that gays are pedophiles, it was pretty clear that they had a child molesting problem and were doing nothing about it.

    They deserve more than bankruptcy.

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  17. Michael Reynolds says:

    VATICAN CITY—Telling the youth organization that if they come for the king they best not miss, the Catholic Church announced Thursday that it was not about to be out-molested by the goddamn Boy Scouts. “If some pissant organization like the Scouts thinks they can beat us at the molestation game, then they have another fucking thing coming,” said Pope Francis, directing his message to the Scouts’ leaders as he stressed that a couple thousand piddling cases was a drop in the bucket compared to the generations of sexual abuse that had made the Catholic Church number-one in molestation for centuries on end. “We’re talking hundreds of thousands of parishioners, children, and nuns abused by the people they trust most. Plus, we’re not doing it while hiding out in the woods like a bunch of cowards. We’re just at the back of the church, putting up huge numbers on the board day after day. So don’t come at us with this weak-ass shit, Boy Scouts. We’re the OG diddlers around here.” At press time, the Catholic Church had offered to send a few dozen priests to the Boy Scouts of America to show them how it’s done.

    The Onion, of course.

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  18. Teve says:

    @Gustopher: What I’m hearing on Twitter is that they’re doing this to try to get out of the next several decades of sex abuse lawsuits.

  19. Teve says:
  20. Fortunato says:

    @Fortunato:

    Sad to see the devolution of the organization.

    The term ‘devolution’ is undoubtedly a mistake on my part.
    I meant no disrespect to the kids my age who were being molested while I had the good fortune of being part of a great little troop.

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  21. Argon says:

    @OzarkHillbilly:

    @Argon: My brother’s has Nixon’s signature. At least it’s not trump’s

    Mine had Jimmy Carter’s.

  22. Neil Hudelson says:

    I was in scouts from Tiger (first grade Cub Scout) through Eagle. When one is in scouts that long, you come to understand that each troop’s experience is entirely unique. While scouts is a very hierarchical organization, and BSA requires a lot of ass-covering paperwork, for the most part the scouting experience is designed and controlled by whomever is the Scoutmaster. There are opportunities to engage in a more ‘generic’ scouting experience–camps are ran by councils and there’s much more continuity between one camp and another then one troop and another–but for the most part a scout’s good or bad experience will be because of the time and effort the scoutmaster put in. Ours was a tech leader who made and sold half a dozen companies during the Dot Com era, and retired to low-cost southern Indiana. While some scout troops were camping in a local state park, we were scuba diving in Hawaii. Going hiking in Kentucky? Cool, I’ll be digging a snow tunnel on the Canadian tundra. You sell popcorn? We created a functioning lawn care business with over a 100 clients, funding all of our scouting needs. But if it weren’t for those rare times–camp, or the Order of the Arrow–where we would actually interact with other troops that you understand there’s not a single Scouting Experience.

    This is my long winded and winding way of saying it’s the Cover-up, not the Crime. BSA had insurance to cover any liability from any single scoutmaster’s abuse. At least by the 90s, they had mandatory training in place for all scoutmasters, and any new scoutmaster would sign away their soul in triplicate just to ensure any action they took wouldn’t be a liability issue for BSA. While they would take a hit in the media, they could plausibly say that any molestation was the result of a single bad person, and that across the nation there were thousands and thousands of scout troops delivering wholesome, character-building experiences. They had everything they needed to hang out to dry an abusive POS.

    Instead, they covered it all up, over and over and over again. BSA’s expecting “1,000 to 5,000 victims to come forward,” so what’s the real count do you reckon? 10,000? That’s decades of covering up abuse, and for what?

    Edit: Mine was signed by Bush II.

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  23. Lynn says:

    @Gustopher:

    My brother applied to be a scout leader and was turned down because he’s gay … they would have been a lot better off with him than with many of the straight guys.

    1
  24. Teve says:

    I bet whoever downvoted my link to the article about the 12,000+ known victims of Boy Scout leaders, was one of those leaders. 😀 😛 😀 😛 😀 😛

  25. Chip Daniels says:

    @Neil Hudelson:
    My son was in it also from Tiger to Eagle, and I served terms as Cubmaster and Scoutmaster from 1994-2008
    You are exactly right, that each troop has a very different experience.

    Our Southern California troop welcomed the son of a lesbian couple, who served on our parent’s council. Our district and council also were very strict about Youth Protection, and so its painful for me to hear about the decades of neglect and malign indifference by the various Scouting organizations.

    But they have to be held to account. What may follow the Scouts is anyone’s guess, but the concept is a good one.

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  26. An Interested Party says:

    But I would caution against superficial commentary.

    Hmm…self-awareness doesn’t appear to be your strong suit…

    1
  27. An Interested Party says:

    @Guarneri: You’re most welcome…anything for you, sweetie…