Following months of negotiations with various interested groups, the Boy Scouts of America is pushing its bankruptcy case forward. Recently, the BSA received approval from the Delaware Bankruptcy Court to adopt a bar date for sexual abuse victims to file claims against the organization’s Chapter 11 estate while negotiations continue over a potential global settlement to the case.
The sexual abuse survivors organization into a represented class earned them some ground in the claim procedure process, including pushing back the deadline to file a proof of claim from the 80 days originally anticipated by the BSA at their first-day hearing, to November 16, 2020 – nearly 9 months after the petition date. However, this victory may ring hollow as many survivors are likely to find the 12-page special claim form to be too daunting to complete, or the instructions too confusing to file correctly even if the claim form is completed.
While the Court expressed at the hearing that narrative portions of the form may be considered “optional,” nothing in the approved form itself indicates that sexual abuse claimants can skip any of the questions, including information that appears wholly irrelevant to whether a survivor was actually sexually abused, including their marital history, educational background, and military service. The approved sexual abuse survivor claim form can be found here, which contrasts starkly with the kind of information required to file all other, non-sexual abuse claims found in the Official Form 410 Proof of Claim.
The proof of claim form adds some color to how BSA intends to handle sexual abuse victim claims. The BSA plan of reorganization was filed at the same time the case was commenced. No amendments have yet been filed. Despite setting a claim bar date and identifying the granular level of detail required from sexual abuse claimants, the original plan as filed has very little information about what kind of compensation may be available for this group. The plan classifies sexual abuse claimants separately, in a class lower in priority than all other creditors, and establishes a victim trust fund to provide payment for those claims. The plan proposes to utilize a channeling injunction to direct all claims to the trust and enjoin claims from being brought or continued against the debtors, their reorganized entities, local councils, and a host of other entities and organizations as yet to be named in the plan, as well as the officers, directors, equity holders, and other related individuals of the entities. The only exception to the channeling injunction would be claims brought directly against the individual(s) who perpetrated the abuse. The plan identifies the assets to funds this trust as certain insurance rights, wholly discretionary additional assets from BSA, and as yet to be identified assets from local councils and other organizations that plan to avail themselves of the injunction. The court has not yet set a date on approval of BSA’s disclosure statement or plan.
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