Boy Scouts says tort claimants’ committee ‘poisoning well’ in cases

By Sarah Lizee

Olympia, Wash., Jan. 12 – Boy Scouts of America (BSA) said the official tort claimants' committee is disregarding its fiduciary duty and acting against the interests of the class it represents, according to court documents filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, when preliminary voting results for the BSA’s Chapter 11 plan came in, the committee issued a press release saying the plan had failed to garner enough votes from eligible voters. The committee simultaneously filed a status report relating to the voting results with the court.

“Survivors understood that the plan does not adequately compensate them,” John Humphrey, co-chair of the committee, had said.

However, the BSA responded by saying the status report was an “advocacy piece” by the committee, intended to “further poison the well in these cases and destroy the results of the coalition, future claimants’ representative, debtors and ad hoc committee’s hard-fought efforts.”

“If the [committee] is successful, survivors will receive virtually no recovery in these Chapter 11 cases and the only ‘winners’ will be the [committee’s] professionals and those state court lawyers that believe public destruction of the debtors’ plan will yield more for them in individual negotiations pertaining to their cases,” the BSA said in the court documents.

The BSA said the committee’s status report “disregards the wishes of the vast majority of survivors and proceeds to act against them.”

The preliminary voting results demonstrate that 85% of individual abuse survivors who voted via direct ballot, rather than by master ballot, voted in favor of the plan, the BSA said.

In contrast, more than 59% of the votes to reject the plan were cast by master ballots.

“Of these, vocal opponents aligned with the [committee] accounted for at least 79%,” the BSA said.

“These preliminary results demonstrate that individual abuse survivors heavily support the plan, while certain plaintiffs’ firms – largely those aligned with the [committee] – that voted their clients’ claims via master ballot oppose the plan.”

The BSA said the committee owes a fiduciary duty to the class of creditors it represents, and its members are required to place the interests of its constituent class above their own personal stake in the bankruptcy case.

“The [committee] weaponizes the preliminary voting results to make inappropriate confirmation arguments regarding third-party releases, which are not properly before the court, and based upon voting results that are subject to change, as clearly set forth in the preliminary voting report,” the BSA said.

The BSA also said that the committee has failed to inform survivors that they’ll likely be paid in full under the plan.

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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