Since their conception in 1910, the Boy Scouts of America have had over 110 million members pass through their doors. However, the organization that has been plagued by controversy in recent years is filing for bankruptcy.
The long foreseen bankruptcy of the organization stems from the financial burden caused by the decades of legal restitution dues, recently worsened by the passing of legislation making it easier for victims to receive compensation from fossilized cases.
“You’re talking about thousands of perpetrators,” Seattle-based lawyer Michael Pfau, who has represented more than 300 Boy Scout victims in 34 states, told the New York Daily News. “You’re talking about tens of thousands of victims. This will be [one of] the largest bankruptcies the country has ever seen, and likely one of the largest corporate bankruptcies.”
But this does not necessarily mean the end of the Boy Scouts. While bankruptcy is a blanket term, the Chapter 11 Bankruptcy the BSA filed for would allow the Scouts to make a comeback.
“While we know nothing can undo the tragic abuse that victims suffered, we believe the Chapter 11 process – with the proposed Trust structure – will provide equitable compensation to all victims while maintaining the BSA’s important mission,” said Roger Mosby, president and chief executive officer of the BSA, in an interview with Fox News.
While the allegations against the BSA are certainly nothing new, what is new is just who exactly is paying the settlements. While all under the umbrella of, “Boy Scouts”, the BSA is not entirely owned by the organization.
There are more than 250 local councils, which own hundreds of camps, reservations and other properties across the country. These councils are also indicted in the suit, meaning they could be the ones to foot the bill despite pushback. For instance, on its own, the Sam Houston Area Council, which is developing the new Texas facility, Camp Strake, has over $150 million in assets by itself.
The Boy Scouts have said in materials about the restructuring plan that local council assets were not “directly affected” by the bankruptcy filing, but that local councils “will have an opportunity” to contribute to the victims’ fund.
“The idea that the councils don’t have any relationship to Scouting is like arguing that General Motors doesn’t have any relation to its factories,” said John Manly, another lawyer who represents a Boy Scout claimant and is separately leading legal efforts in the sexual abuse scandal involving U.S.A. Gymnastics, which has also filed for bankruptcy protection also.
Approximately 90% of pending and asserted abuse claims against the BSA relate to abuse that occurred more than 30 years ago. So the plan to restructure is first and foremost to protect its financial assets while also paying the victims of abuse.
The Boy Scouts argue that the local councils are legally and financially independent, and emphasized that they were not part of the bankruptcy filing. But the national organization proposed a 90-page reorganization plan that it said would allow the local councils to be shielded from the abuse lawsuits. Local councils of the BSA have made clear they will be giving money and assets to the Boy Scouts Victims Trust, but were purposely left out of the Chapter 11 application.
“As our nation’s foremost youth program of character development and values-based leadership training, we have an important duty to keep children safe, supported and protected while preparing them for their future. We have every intention of continuing to fulfill these responsibilities,” according to scouting.org.