The Boy Scouts of America has filed for bankruptcy, seeking protection from a wave of sexual abuse lawsuits filed by men and boys who say the organization failed to protect them as Scouts.
The monumental filing seeks to reckon with all abuse claims at once in a final court process. By seeking Chapter 11 bankruptcy protection, the national umbrella of the Boy Scouts signaled that it hopes to survive after compensating what are expected to be thousands of victims.
The move, while expected, is unprecedented. Never before has such a large and established nationwide youth nonprofit filed for bankruptcy. The organization filed the court papers Tuesday just after midnight local time in Delaware, where the case will work its way through a federal bankruptcy court.
The path to the proceedings can be traced back a decade to Portland, victims’ lawyers say. A Multnomah County jury awarded $19.9 million damages to a Portland man abused as a Scout. It was the largest verdict against the group in its long history. The trial also triggered the public release of internal files kept for decades that revealed the identifies and crimes of hundreds of known abusers.
“If the files were not released, the Boy Scouts would have, I think, been able to weather the storm,” said Paul Mones, one of the lead attorneys on the case.
Search the Boy Scouts “perversion files” by name, state or city
The files informed thousands of former Scouts about the pervasiveness of sexual abuse in the organization and the extent of the group’s knowledge, he said. The records prompted hundreds of lawsuits, including several in Oregon.
But statutes of limitations precluded many former Scouts from filing legal claims. That changed recently when lawmakers in the populous states of California, New York and New Jersey opened a window for victims to sue regardless of when they were abused. A flood of claims followed.
The bankruptcy case will halt active lawsuits and, according to lawyers familiar with bankruptcy proceedings, will likely prevent future litigation tied to past abuse.
“If a Portland, Oregon jury was able to award almost $20 million to one person, if more trials were had around the country, the Boy Scoutsjust did the math,” Mones said.
A Boy Scouts spokesperson could not be reached to discuss the filing. However, the group published a statement to its website.
“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,” chief executive Roger Mosbysaid in a statement.
In the bankruptcy petition, the group said it had $1 billion to $10 billion in assets and $500 million to $1 billion in liabilities.
The bankruptcy case will require all victims to file claims with the federal bankruptcy court in Wilmington, Delaware, which will oversee a months-long process to add up the Boy Scouts’ assets and determine how much victims will receive.
The Boy Scouts’ files made public in Oregon indicate that there may be several thousand victims of sexual abuse who may come forward to file claims, Mones said.
At least a handful of Oregon victims who have already sued will now have to file claims instead with in the bankruptcy case.
A key issue during the bankruptcy will be how much local councils, like the five that operate in Oregon, have to contribute toward paying victims, said Peter Janci, a Portland lawyer who was also part of the 2010 Portland case. Janci and his law firm represent dozens of victims in current cases across the country and he planned to travel to Delaware to be on hand to follow the early bankruptcy proceedings.
He said he expects the Boy Scouts will ask the court to extend bankruptcy protections to local chapters, without each group having to officially file for bankruptcy. Janci said he believes local councils should help compensate victims in order to be protected from future lawsuits.
The same debate may also extend to organizations that sponsor Boy Scouts troops, such as churches and community clubs.
The national Boy Scouts, based in Texas, reported more than $1 billion in assets in its latest tax-exempt filing. Four of the five regional councils in Oregon listed more than $56 million worth of assets in their most recent filings. The Cascade Pacific Council holds three-quarters of those assets. The Portland-based council oversees 20,000 youth and 9,000 adult volunteers.
Although the branch reported more than $40 million in assets for tax purposes, the true value of its holdings is unclear. For example, it reported the value of its land at $322,000. County property records estimate the site of its Portland headquarters alone is worth more than $3 million. The council also owns land throughout western Oregon where it operates camps, including a coastal property near Tillamook.
The council was at the center of the lawsuit that led to the historic verdict against the Scouts. During the trial, lawyers spent days going over the national organization’s internal files that tracked reports of abuse on the local level.
Mones said he clearly remembers questioning an expert witness about one specific file, in which executives had concluded that a troop leader sleeping nude with Cub Scouts was not “sufficient reason” to permanently bar him.
“You could hear the oxygen go out of the room,” Mones said. “It was so abhorrent to people.”
The Boy Scouts tried to block the files from being disclosed after the verdict. But the Oregon Supreme Court sided with several news organizations, including The Oregonian/OregonLive, and ordered the files to be made public.
The files showed the public how the organization had long known about problems of sexual abuse and failed to take appropriate actions to protect children, Janci said.
The timing coincided with a shift in national consciousness away from blaming rogue bad actors to the institutions who enable them, Mones said. In its wake, many churches, schools and youth groups have faced claims from people who say they were abused as children by adults in positions of power. Portland private school Catlin Gabel is in the news this year for just that reason.
Some local and regional groups, including branches of the Catholic Church, have turned to bankruptcy before. Those cases provide a model for some aspects of the Boy Scouts case, such as how payments to individual victims might be determined, Mones said.
Janci said the bankruptcy trustee will appoint a group of victims to weigh in on the bankruptcy plan. Eventually, the court will set a date by which all victims need to file claims.
The court will decide between now and then how potential victims will be notified of their legal rights to file claims, Janci said.
Mones said if people do not file claims by the filing deadline, they likely will not be able to sue the Boy Scouts in the future.
He said the organization could have avoided altogether bankruptcy if leaders took steps to address sexual abuse allegations after the 2010 verdict that led to public awareness about how far-reaching the problems were.
“This is not just a financial bankruptcy, but it is also a moral bankruptcy,” he said.
— Molly Young
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