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Boy Scouts of America Files for Bankruptcy After Wave of Potential Lawsuits

By Elaine Owen, from Associated Press Reports —

After hundreds of sex abuse lawsuits, the Boy Scouts of America filed for bankruptcy protection Tuesday (Feb. 18) hoping to work out a potentially mammoth victim compensation plan that will allow the hallowed, 110-year-old organization to continue.

The Chapter 11 filing in federal bankruptcy court in Wilmington, Delaware, sets in motion what could be one of the largest, most complex bankruptcies ever seen. Scores of lawyers are seeking settlements on behalf of several thousand men who say they were molested as scouts by scoutmasters or other leaders decades ago but are only now eligible to sue because of recent changes in their state’s statute-of-limitations laws.

By going to bankruptcy court, the Scouts can temporarily put those lawsuits on hold. Ultimately, however, they could be forced to sell off some of their vast property holdings, including campgrounds and hiking trails, to raise money for a compensation fund that could amount of billions of dollars.

“The BSA cares deeply about all victims of abuse and sincerely apologizes to anyone who was harmed during their time in Scouting. We are outraged that there have been times when individuals took advantage of our programs to harm innocent children,” Roger Mosby, the president and CEO of the Boy Scouts of America, said in a statement released at 1 a.m. Tuesday. “While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process–with the proposed Trust structure–will provide equitable compensation to all victims while maintaining the BSA’s important mission. ”

The filing early Tuesday punctuates a tumultuous time for the 110-year-old organization, which continues to be one of the largest youth groups in the United States.

However, youth membership has declined more than 26 percent in the past decade. This dramatic drop in numbers, coupled with the loss of a key partnership with the Church of Jesus Christ of Latter-day Saints, has left the Boy Scouts struggling to find ways to remain relevant. Last year, it began accepting girls into its namesake program, setting off a recruitment war with the Girl Scouts.

Meanwhile, over the past decade, lawsuits and media investigations have revealed internal Boy Scout documents detailing generations of alleged abusers accused of preying on Scouts. Amid other high-profile child abuse scandals and the #MeToo movement, several states and the District of Columbia have overhauled their statute-of-limitations laws concerning child sexual abuse, opening the door to scores of potential lawsuits against the Boy Scouts.

The bankruptcy represents a painful turn for an organization that has been a pillar of American civic life for generations and a training ground for future leaders. Achieving the rank of Eagle Scout has long been a proud accomplishment that politicians, business leaders, astronauts and others put on their resumes and in their official biographies.

The financial outlook worsened last year after Arizona, New York, New Jersey and California passed laws making it easier for victims of long-ago abuse to file claims. Teams of lawyers across the U.S. have been signing up clients by the hundreds to sue the Boy Scouts.

Most of the newly surfacing cases date to the 1960s, ‘70s and ‘80s. The organization says there were only five known abuse victims in 2018. The Boy Scouts credit the change to an array of prevention policies adopted since the mid-1980s, including mandatory criminal background checks and abuse-prevention training for all staff and volunteers, and a rule that two or more adult leaders be present during all activities.

Matters to be addressed in bankruptcy court include the fate of the Boy Scouts assets; the extent to which the organization’s insurance will help cover compensation; and whether assets of the Scouts 261 local councils will be added to the fund.

“There are a lot of very angry, resentful men out there who will not allow the Boy Scouts to get away without saying what all their assets are,” said lawyer Paul Mones, who represents numerous clients suing the BSA.

Amid the crush of lawsuits, the Scouts recently mortgaged major properties owned by the national leadership, including the headquarters in Irving, Texas, and the 140,000- acre Philmont Ranch in New Mexico, to help secure a line of credit.

Founded in 1910, the Boy Scouts have kept confidential files since the 1920s listing staff and volunteers implicated in sexual abuse, for the avowed purpose of keeping predators away from youth. According to a court deposition, as of January the files listed 7,819 suspected abusers and 12,254 victims.

Until last spring, the organization had insisted it never knowingly allowed a predator to work with youths. But in May, The Associated Press reported that attorneys for abuse victims had identified multiple cases in which known predators were allowed to return to leadership posts. The next day, Boy Scouts chief executive Mike Surbaugh wrote to a congressional committee, acknowledging the group’s previous claim was not true.

Ahead of the Chapter 11 filing, lawyers said that because of the organization’s 50-state presence, as well as its ties to churches and civic groups that sponsor scout troops, a bankruptcy by the Boy Scouts would be unprecedented in its complexity. It would be national in scope, unlike the various Catholic Church bankruptcy cases, which have unfolded diocese by diocese.

“A Boy Scout bankruptcy would be bigger in scale than any other child abuse bankruptcy we’ve ever seen,” said Seattle-based attorney Mike Pfau, whose firm is representing scores of men nationwide alleging they were abused as Boy Scouts.

Illustrating the depth of its problems, the organization in 2018 sued six of its insurers for refusing to cover its sex abuse liabilities. The insurers said their obligation was void because the Scouts refused to take effective preventive measures such as warning parents that boys might be abused.

Resources to help survivors of sexual assault include the National Sex Assault Hotline (800- 656-4673), and The Rape, Abuse, & Incest National Network (RAINN) online hotline: 800.656.HOPE

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