The Boy Scouts of America (BSA) has reached a settlement with sex-abuse victim groups as the youth organization proceeds with its insolvency – but the new deal noticeably leaves out any mention of the group’s insurers.
According to an agreement recently filed in bankruptcy court, BSA is offering up to $850 million in cash and other assets to survivors, and will sign over insurance rights to a trust. The trust will administer claims and distribute payments.
“After months of intensive negotiations, the debtors have reached resolution with every single official and major creditor constituency in these Chapter 11 cases,” BSA attorneys indicated in the filing.
Notably, the proposed deal makes no mention of insurance carriers that may be obligated to indemnify victim claims under the policies they sold the BSA decades ago, when most of the alleged abuse occurred.
In a previous court filing, attorneys representing several insurance companies had accused the BSA of allowing the attorneys of abuse victims to rewrite the youth group’s restructuring plan to include terms that are favorable to their clients. The insurers’ representatives are concerned that the BSA’s liability for abuse claims would be adjudicated under proposed trust distribution procedures in order to determine coverage issues, The Associated Press said.
The Wall Street Journal reported that the new settlement deal must first be put to creditor vote and win approval from the US Bankruptcy Court in Wilmington, DE.
News of BSA’s new settlement deal with victims comes after the group dropped its previously agreed $650 million settlement with insurer Hartford Financial Services Group. That deal was abandoned after victim groups indicated that they would vote down any compensation plan that includes the BSA’s settlement with The Hartford, which they felt was inadequate.