Boy Scouts walk back $250 mln abuse settlement with Mormon church

The statue of a scout stands in the entrance to Boy Scouts of America headquarters in Irving, Texas, February 5, 2013. REUTERS/Tim Sharp/File Photo
  • Mormon church to get more limited protection in Boy Scouts bankruptcy
  • Revised bankruptcy plan could be approved on Aug. 24, says BSA

(Reuters) - The Boy Scouts of America will attempt to exit from bankruptcy without a $250 million payment from the Church of Jesus Christ of Latter-day Saints after a judge refused to approve a settlement between the organizations. The settlement involved BSA protecting the Mormon church from sexual abuse claims in exchange for a $250 million contribution to the BSA settlement fund.

U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware, rejected the $250 million settlement and other more minor aspects of the Boy Scouts' broader restructuring proposal on July 29, preventing the nonprofit organization from moving toward a bankruptcy exit.

In rejecting the settlement with the Mormon church, Silverstein said that it went too far in attempting to protect the church from abuse claims that only were loosely connected to scouting activities. The previous settlement would have covered abuse perpetrated by a priest who was also a scout leader, even if the abuse did not occur at a scouting event, the judge wrote.

The Boy Scouts organization said late Friday that the court should quickly approve its revised bankruptcy plan that will provide at least $2.3 billion to compensate more than 80,000 men who say they were sexually abused as children by troop leaders.

The Church of Jesus Christ of Latter-day Saints did not immediately respond to a request for comment Monday.

Without a separate settlement agreement, the Mormon Church will receive less complete protection from sexual abuse claims related to its Scouting activities.

Jason Amala of Pfau Cochran Vertetis Amala, a firm that represents more than 1,125 abuse victims in the Boy Scouts bankruptcy, said Monday that claimants were better off without the $250 million from the Mormon settlement. The Church will now be forced "back to the negotiating table" to make a fairer offer to resolve abuse claims, Amala said.

The Boy Scouts said that its revised plan could be quickly approved at a court hearing scheduled for Aug. 24, but a group of insurers including Liberty Mutual Group opposed that request Monday. The insurers said that the BSA had not addressed all of the deficiencies pointed out in Silverstein's July 29 opinion, and they asked the court for more time to review the changes.

The Boy Scouts filed for bankruptcy in February 2020 after being hit by a flood of sexual abuse lawsuits when several U.S. states passed laws allowing accusers to sue over allegations dating back decades.

The amount of money that individual abuse survivors stand to gain from the bankruptcy plan ranges from $3,500 to $2.7 million.

The case is In re Boy Scouts of America, U.S. Bankruptcy Court for the District of Delaware, No. 20-10343.

For the Boy Scouts: Jessica Lauria, Mike Andolina, Matt Linder and Laura Baccash of White & Case; and Derek Abbott and Andrew Remming of Morris, Nichols, Arsht & Tunnell

For the Church of Jesus Christ of Latter-day Saints: Michael Merchant of Richards, Layton & Finger.

For the objecting insurers: Richard Doren, Michael Rosenthal, James Hallowell, Keith Martorana and Matthew Bouslog of Gibson Dunn & Crutcher

(NOTE: This story has been updated to remove an incorrect reference to Chubb, which was not among the objecting insurers.)

Read more:

U.S. judge rejects parts of Boy Scouts' $2.7 billion sex abuse deal

Boy Scouts secure more survivor support ahead of final battle over sex abuse deal

Boy Scouts wrap up month-long trial over $2.7 bln sex abuse deal

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