Boy Scouts of America new agreement provides more for abuse victims

By Sarah Lizee

Olympia, Wash., July 2 – Boy Scouts of America (BSA) is seeking court approval of a settlement agreement that sees abuse victims getting up to $850 million, about $100 million more than previously expected, according to a motion filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The BSA said the amended plan under the agreement now has the significant plaintiff support of representatives for about 60,000 abuse survivors and provides a framework for the global resolution of abuse claims, including third-party releases for the local councils and others that are essential to the debtors’ ability to continue to carry out its scouting mission.

The BSA was expected to file a fourth amended Chapter 11 plan and disclosure statement that embody the agreement on Friday.

A hearing on approval of the disclosure statement is scheduled for July 20.

In the third amended disclosure statement, BSA said that it has engaged in substantial negotiations with many mediation parties regarding a path forward that would maximize the value of the debtors’ estates.

The debtor said that in the most recent mediation sessions, it worked on a plan that garnered the support of the creditor group representing the majority of holders of direct abuse claims.

Specifically, the plan provides for two paths to reorganize the debtors. The first plan of reorganization is a global resolution plan, which provides for the framework for global resolution of abuse claims against the debtors, local councils, and contributing chartered organizations, in exchange for contributions to a settlement trust for the benefit of survivors of abuse, including the contribution of substantial insurance assets.

A global resolution note will be issued on the effective date to the settlement trust by the reorganized debtor in the principal among of $80 million. The note will bear interest at a rate of 5½%, payable semiannually.

BSA said it estimates that the net unrestricted cash and investments under the global resolution plan would be about $90 million resulting in a value of the settlement trust contribution of about $250 million.

According to the new agreement, local councils will now make a contribution of at least $600 million.

If holders of the direct abuse claims do not provide enough votes to accept the plan, the debtor will be required to seek confirmation of a back-up toggle plan, which provides for the resolution of abuse claims and other claims against only the debtors, not local councils or contributing chartered organizations, thereby reducing the potential recoveries under the plan for holders of direct abuse claims from as must as 100% of their claims to as little as 1% of their claims.

BSA said the toggle plan would force abuse survivors to seek compensation on account of their claims against local councils and chartered organizations by filing independent lawsuits in the tort system against those entities.

“The debtors believe that this will necessarily entail lengthy, complicated litigation,” the debtor said.

As a result, BSA said it is strongly encouraging abuse survivors to vote in favor of the global resolution.

Holders of general unsecured claims will receive, subject to their ability to elect convenience class treatment, their pro rata share of a core value cash pool. BSA will deposit cash into the pool by making four semi-annual installment payments of $6.25 million. If a claim is greater than $50,000, and the holder of that claim makes the optional convenience class election, the claim will be reduced to $50,000 and the holder will receive cash for their $50,000 convenience claim.

Holders of non-abuse litigation claims will retain the right to recovery from available insurance coverage, available proceeds of any insurance settlement agreements, and co-liable non-debtors, if any, or their insurance coverage on account of those claims. If a holder’s claim is not paid in full from these sources, that holder may elect to have their claim treated as a convenience claim.

The 2010 credit facility claims, 2019 revolving credit facility claims, 2010 bond claims and 2012 bond claims will be restructured under restated debt and security documents.

Holders of other priority claims will receive payment in full in cash, or other treatment that renders their claims unimpaired.

Holders of other secured claims will be paid in full in cash, receive the collateral securing their claims, or receive other treatment that leaves their claims unimpaired.

Holders of convenience claims will receive cash in an amount equal to their claims.

Interests will be canceled with no distribution.

Boy Scouts of America is based in Irving, Tex. It filed bankruptcy on Feb. 17, 2020 under Chapter 11 case number 20-10343.

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