A Delaware bankruptcy judge has approved parts of the Boy Scouts of America’s reorganization plan but has rejected other provisions, saying the organization has decisions to make regarding the plan
DOVER, Del. — — A Delaware bankruptcy judge has approved parts of the Boy Scouts of America’s reorganization plan but has rejected other provisions, saying in a ruling Friday that the organization has"decisions to make” regarding the plan.
The ruling is the just latest example of uncertainty in a case that has seen myriad twists and turns since the Boy Scouts sought bankruptcy protection more than two years ago to stave off a flood of lawsuits alleging child sexual abuse by Scout leaders and volunteers. When it filed for bankruptcy, the BSA faced about 275 filed lawsuits and was aware of roughly another 1,400 potential cases, but more than 82,200 abuse claims were filed in the bankruptcy. Attorneys for BSA insurers argued early on that the sheer volume of claims was an indication of fraud and the result of aggressive client solicitation by attorneys and for-profit claims aggregators.
In addition to the arguments by opposing insurers, the case presented Silverstein with one of the most contentious issues for bankruptcy judges — whether third parties that are not bankruptcy debtors themselves can escape future liability in the tort system by contributing to a Chapter 11 debtor’s reorganization plan.
Under the plan proposed by the Boy Scouts, insurance companies, local BSA councils and troop sponsoring organizations would receive broad liability releases protecting them from future sex abuse lawsuits in exchange for contributing to the victims compensation fund — or even for just not objecting to the plan.
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