The Boy Scouts of America’s bankruptcy reorganization plan has survived its first appellate challenge. The General Council on Finance and Administration has provided a brief overview of what that means, and what might be next.
So, what’s the background? How did we get here?
In February 2020, The Boy Scouts of America (“BSA”) filed for bankruptcy protection in Delaware in response to facing a significant number of lawsuits involving allegations of child sexual abuse. According to the BSA, the bankruptcy filing was intended to permit it to “equitably compensate victims who were harmed during their time in Scouting and continue carrying out its mission for years to come.”
Because United Methodist local churches have been one of the largest collections of chartering organizations for Scout troops, a “United Methodist Ad Hoc Committee” – consisting of several chancellors, two bishops, and two lawyers employed by GCFA – was formed to advocate for United Methodist interests within the bankruptcy proceeding. The Committee’s involvement ultimately led to a negotiated settlement, which includes a contribution by United Methodists of $30 million.
In September 2022, the bankruptcy court approved a reorganization plan for the BSA that included the settlement negotiated by the Committee. While the approved plan was supported by most bankruptcy participants, the court’s ruling was appealed to the United States District Court located in Delaware. On March 28, 2023, that district court released an opinion affirming approval of the reorganization plan.
What does the March 2023 ruling mean?
It means the reorganization plan – and the settlement negotiated by the Committee – is one step closer to being implemented and thus bringing to a close a very lengthy bankruptcy process. The reorganization plan would create a "Settlement Trust” to compensate abuse survivors. Once the reorganization plan is put into place, it will likely take many months for the Settlement Trust to be formed and then begin making payments to survivors.
What does it mean for my local Scout troop at my United Methodist church?
This specific ruling probably doesn’t mean much to the ongoing activities of Scout troops. Parallel to the bankruptcy, United Methodist leadership worked with the BSA to develop relationship documents to replace the charter agreement previously used for establishing troops. The General Commission on United Methodist Men has compiled those documents, along with other helpful information, here.
What are possible next steps for this court case?
It is possible, if not likely, that some, or all of the parties, that sought review from the district court will file another appeal, this time to the United States Court of Appeals for the Third Circuit. If such an appeal is filed, it is currently unknown how that might affect the timing of the reorganization plan going into effect.
Anything else I should know?
The United Methodist Ad Hoc Committee and its bankruptcy counsel, as well as other United Methodist leaders, will continue to monitor the progress of this litigation and its potential impact on the denomination.