Boy Scouts: Bankruptcy, Statue of Limitations, and Lawsuits

Boy Scout badges and uniform

There has been a huge upset relating to the Boy Scouts of America (BSA) within the last couple of years. Not only have they been experiencing a decline in memberships, but they have had an incredible amount of Boy Scouts come forward with sexual abuse claims. In fact, there have been so many claims that the Boy Scouts of America filed for Chapter 11 bankruptcy.

When the Boy Scouts of America filed for Chapter 11 bankruptcy, they did so in Delaware overnight, shocking everyone. Their filing was considered "unprecedented in both scope and complexity" according to USA Today.

So, what does all of this mean going forward? How does Chapter 11 bankruptcy affect the mounting civil litigation against them? What happens to victims that have yet to speak up and file sexual abuse claims?

When the Whispers of Bankruptcy Began

The whispers of possible bankruptcy started in 2018 when the Boy Scouts of America (BSA) was in the midst of many legal battles revolving around alleged sexual abuse within their ranks. Many wondered if they would be following in the footsteps of the Catholic Church, which had also faced a similar dilemma.

Then, Boy Scouts started seeing increases in annual membership fees from $33 to $60, hinting at possible financial trouble within the BSA.

Amidst the rising liability of lawsuits for sexual abuse cases in 2018, the BSA sued six of its insurance carriers for refusing payout claims. The insurance carriers had rejected the claims because the Boy Scouts of America allegedly failed to take preventative measures to stop the abuse of those in their charge. The fight between BSA and its insurers continues.

To top it off, in January 2019, the Church of Jesus Christ of Latter-day Saints (one of the BSA's largest partners for 100 years) pulled hundreds of thousands of their youth from the Boy Scouts program in favor of their own new program. That withdrawal cost the BSA 18% of its members.

According to court filings, the Boy Scouts of America face thousands of lawsuits (and potential claims) in state and federal courts around the United States. They claim to have filed for Chapter 11 bankruptcy to create a Victims Compensation Trust that will compensate victims of the Boy Scouts of America staff, volunteers, etc. From 2017-2019 alone, the Boy Scouts of America paid $150 million in settlements and legal costs. They filed for Chapter 11 bankruptcy to prevent more settlements for sexual abuse past November 16, 2020 (the deadline for victims to file claims as set by the bankruptcy arrangements). By filing for bankruptcy, the BSA can consolidate the lawsuits against them and potentially arrange settlements that are far lower than what they would have been otherwise.

How Filing for Chapter 11 Bankruptcy Benefits the Boy Scouts of America

By filing for Chapter 11 bankruptcy, the Boy Scouts of America can now reorganize itself. They can meet their obligations to pay creditors, sexual abuse victims, and restructure themselves to ensure that they can continue operating after the conclusion of the proceedings.

The bankruptcy filing also affords the Boy Scouts of America to forego defending individual civil cases and instead deal with their mounting liability through one overarching bankruptcy proceeding. This means that BSA won't face victims individually. Rather, BSA will organize a trust to compensate thousands of victims but victims only have until November 16, 2020 to file their claim!

All current case filings against the Boy Scouts of America are suspended until the court makes its ruling on BSA’s bankruptcy petition.

Amendments to Statutes of Limitations

38 states amended their statutes of limitations since 2002. Ten states eliminated their civil statute of limitations altogether, and 16 revived expired statutes to ensure that victims of child abuse and neglect could receive compensation for what they endured as part of the Boy Scouts of America.

Lawmakers recognized that by amending these statutes of limitations in their communities, they could give victims the opportunity to publicly call out their abusers that may still be a threat within their communities.

Should You Be Included?

If you or your child have been sexually abused during your time in the Boy Scouts of America by one of their staff, volunteers, etc. then you may be able to receive compensation as part of their bankruptcy legal proceedings. All victims must file their claim by November 16, 2020- so don't wait! Our team can help you gather everything you need and ensure that you receive the compensation you deserve for what you or your child have endured. Fill out our free case evaluation to get started.