Judge delays start of hearing on Boy Scouts bankruptcy plan

DOVER, Del. (AP) — The judge presiding over the Boy Scouts of America bankruptcy has delayed the start of a trial to determine whether the BSA reorganization plan should be upheld after a settlement with the official committee representing more than 80,000 men who say that they were molested as children by scout leaders and others resulted in several new provisions of the plan.

During a three-hour hearing on Friday, Judge Laura Selber Silverstein pushed back the start of the confirmation hearing from February 22 to March 9. Scouts had only asked for a one-week delay, while opponents of the plan said they would need several weeks to analyze and respond to changes in the plan.

The move follows Thursday’s announcement of a tentative agreement between the BSA and the official abuse plaintiffs committee, known as the Tort Plaintiffs Committee, or TCC. The committee was appointed by the US Bankruptcy Trustee to represent and act in the best interests of all victims of sexual abuse. He had long argued that the BSA’s plan to compensate victims of child sexual abuse was “grossly unfair”, representing only a fraction of the potential liabilities of insurers and local scout boards, and a fraction of their ability to pay.

But after weeks of intense discussions, the committee said it negotiated significant changes to the plan and is now recommending that abuse claimants who voted against change their votes.

Among other things, the new plan provides abuse plaintiffs with the ability to sue insurance companies and local troop-sponsoring organizations, such as churches and civic groups, that fail to reach settlements with the trustee that would oversee a $2.6 billion victim compensation fund.

The new plan increases pressure on remaining opponents, including some insurance companies and an ad hoc committee representing various Roman Catholic entities, including a church-affiliated nonprofit that insures hundreds of dioceses, religious orders and institutions.

Ad hoc committee lawyers and dissenting insurers argued Friday that the new plan bears no resemblance to the plan abuse plaintiffs voted on last year. They said they deserved more time to find out how and why the changes were made, and how they affect their customers. They also said the settlement with the TCC was only made possible because the Boy Scouts, without the judge’s knowledge or permission, wrongfully granted the TCC and certain other parties extensions. of the court-ordered Feb. 4 deadline to object to the plan.

An attorney for the US bankruptcy trustee, who acts as a “watchdog” in Chapter 11 cases to ensure compliance with the US bankruptcy code, also took the Boy Scouts to task. David Buchbinder said the plan has changed so much since last fall that the BSA needs to send additional information so abuse claimants and troop-sponsoring organizations can fully understand what’s going on.

“The debtor must explain how these proposed revisions improve the plan for (abuse plaintiffs),” Buchbinder said, adding that the changes also leave troop-sponsoring organizations “even more confused.”

Buchbinder argued in court on Monday that the plan could not be upheld if provisions allowing non-debtor third parties to be released from liability without the consent of abuse claim holders remained in place. He argued that third-party releases for local Boy Scout councils, certain troop-sponsoring organizations and settlement insurers violate plaintiffs’ due process rights and are not permitted under the bankruptcy code.

Meanwhile, critics of the plan note that under the changes unveiled on Thursday, the BSA appears to be moving away from the conclusions of its own hired expert regarding the value of abuse claims. The Boy Scouts now claim that Charles Bates’ findings have not been accepted by any other party and that his findings do not constitute a binding estimate of the BSA’s liability. The BSA also said it would consult with attorneys for the abuse plaintiffs who support the plan about what testimony Bates is expected to provide.

James Hallowell, a lawyer for AIG, a dissident insurer, said Bates’ findings support insurers’ arguments that the plan would result in claim values ​​that would exceed values ​​historically paid by the Boy Scouts before they filed. the balance sheet. Mitch Karlan, another attorney for AIG, said the Boy Scouts apparently agreed with the official abuse plaintiffs panel that Bates’ findings were wrong.

“What’s new is that Dr Bates is, of course, the debtor’s expert, who is apparently thrown under the bus,” he said.

Silverstein told attorneys she “reported the issue” regarding Bates.

“He jumped off the page,” she said.

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