Boy Scouts fall short in support for $2.7 bln abuse settlement

Jan 5 (Reuters) - The Boy Scouts of America fell short of winning the support it sought from sex-abuse victims for a nearly $2.7 billion settlement that could bring the organization out of bankruptcy, according to court papers.

The proposed settlement of more than 82,000 claims of childhood sexual abuse earned the support of just over 73% of those who cast votes, below the 75% the Boy Scouts sought.

Nearly 54,000 survivors cast ballots, according to preliminary results released in a Tuesday court filing. The current tally is not final.

The nonprofit organization said in a statement on Wednesday that it is still negotiating with key parties to garner more support for the deal.

"We are encouraged by these preliminary results," the Boy Scouts said.

The 111-year-old youth group based in Irving, Texas, 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 several decades.

Those claimants are now creditors of the organization, so they must sign off on any plans to restructure and exit bankruptcy. The deal must also eventually be approved by the Delaware judge who has been overseeing the case for the past two years. While the assent of two-thirds of creditors is all that is typically required for a Chapter 11 plan, judges often look for "overwhelming" creditor support in large, complex Chapter 11 cases before giving them the green light.

Representatives of some of the victims have pushed for larger settlements.

"We hope the BSA and the lawyers who supported this plan will take this result as sending a message that the plan they proposed was fundamentally unacceptable to a large bloc of survivors," Irwin Zalkin of Zalkin Law Firm, who represents more than 150 victims, said in a statement.

John Humphrey, the co-chair of the committee representing abuse claimants in the bankruptcy, called the settlement "historically low" from the perspective of individual victims.

But a group representing tens of thousands of victims called the Coalition of Abused Scouts for Justice said on Wednesday that the plan provides victims the "best and fastest avenue to closure, as well as just, fair and equitable compensation."

The Boy Scouts has apologized and says the organization is committed to fulfilling their "social and moral responsibility to equitably compensate survivors."

As negotiations over a deal have dragged on, the Boy Scouts' lawyers had warned it would have to begin selling off assets, which would otherwise be used to compensate abuse claimants, to pay legal fees.

Reporting by Jahnavi Nidumolu in Bengaluru and Maria Chutchian in New York Editing by Alexia Garamfalvi, Jonathan Oatis and Matthew Lewis

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Maria Chutchian reports on corporate bankruptcies and restructurings. She can be reached at