EMERGENCY DOCKET

Court declines to put hold on Boy Scouts bankruptcy plan

The Supreme Court on Thursday rejected a request to temporarily put on hold a bankruptcy plan for the Boy Scouts of America while a challenge to that plan continues in a federal appeals court. A group of childhood sexual abuse survivors had asked the justices earlier this month to block the plan, but in a brief unsigned order, without any public dissents, the justices declined to do so.

Facing tens of thousands of lawsuits by victims of child sexual abuse, the Boy Scouts of America filed for bankruptcy in February 2020. Two-and-a-half years later, a bankruptcy court in Delaware confirmed a $2.5 billion plan that would channel all sexual abuse claims against the Boy Scouts of America into a trust, as well as all claims against local Boy Scouts councils and supporting organizations – which did not file for bankruptcy.

A group of 144 victims of sexual abuse with claims against the local councils and organizations sought to block the bankruptcy plan from going into effect. After they were unsuccessful in the lower courts, they came to the Supreme Court. They argued that the issue in their case is the same one that the justices are currently considering in Harrington v. Purdue Pharma, a challenge to the approval of a multi-billion dollar bankruptcy plan for the maker of the opioid OxyContin. In that case, the Department of Justice objects to provisions in the plan that release members of the Sackler family, which principally owns the company and controlled it until recently, from liability.  

If the court were to rule later this spring or in early summer in the Purdue Pharma case that the provisions releasing the Sackler family are invalid, the victims contended, then the Boy Scouts’ plan should also be invalid. And there is no harm to the Boy Scouts if the plan is temporarily put on hold until the Purdue Pharma ruling is issued, the group of victims continue. By comparison, they stressed, the victims will be harmed by being unable to pursue their claims outside of bankruptcy.

The Boy Scouts of America expressed deep regret for the abuse that the victims and others suffered during their experiences as scouts, but it urged the court to allow the plan to move forward. The bankruptcy court, the group explained, concluded that the plan was “the only way to enable BSA to emerge from bankruptcy and to provide meaningful recovery to survivors.” Moreover, the group added, the plan will “pay in full all Scouting-related abuse claims,” including those of the 144 victims challenging the plan.

And however the Supreme Court rules in the Purdue Pharma case, the group observed, the U.S. Court of Appeals for the 3rd Circuit will have an opportunity to consider that decision before acting on the victims’ appeal.

This article was originally published at Howe on the Court.